Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation

M. Daniele Paserman

No 4396, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper estimates the structural parameters of a job search model with hyperbolic discounting and endogenous search effort. It estimates quantitatively the degree of hyperbolic discounting, and assesses its implications for the impact of various policy interventions aimed at reducing unemployment. The model is estimated using data on unemployment spells and accepted wages from the National Longitudinal Survey of Youth (NLSY). The likelihood function explicitly incorporates all the restrictions implied by the optimal dynamic programming solution to the model. Both observed and unobserved heterogeneity are accounted for. The results point to a substantial degree of hyperbolic discounting, especially for low and medium wage workers. The structural estimates are also used to evaluate alternative policy interventions for the unemployed. Estimates based on a model with exponential discounting may lead to biased inference on the economic impact of policies.

Keywords: Job search; Hyperbolic discounting; Structural estimation; Policy evaluation (search for similar items in EconPapers)
JEL-codes: C73 D90 J64 J68 (search for similar items in EconPapers)
Date: 2004-05
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://cepr.org/publications/DP4396 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation (2008)
Working Paper: Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation (2004)
Working Paper: Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4396

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4396
orders@cepr.org

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by (repec@cepr.org).