Equilibrium Search Models and the Transition From School To Work |
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| Authors: | Audra J Bowlus Nicholas M Kiefer & George R Neumann |
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| Institution: | University of Western Ontario, Canada,;Cornell University, USA and CLS Aarhus and University of Aarhus, Denmark,;University of Iowa, USA and CLS Aarhus, Denmark |
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| Abstract: | This paper applies the Burdett–Mortensen (1998) equilibrium search model to study the school to work transitions of U.S. high school graduates. We consider the case of discrete firm heterogeneity and provide a computational method to obtain the MLE. Our results show that unemployed blacks receive fewer offers than whites and employed blacks are more likely to lose their jobs. Importantly, employed blacks and whites receive job offers at the same rate. Assigning the whites' search parameters to the blacks and re-solving reveals that 75 percent of the observed wage differential is explained by the job destruction rate differences. |
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