Duration Dependence, Endogenous Search and Structural Analysis of Labor Market Histories

Mark Y An ()

No 95-13, Working Papers from Duke University, Department of Economics

Abstract: This paper studies a structural model of labor market history in an environment with duration dependence. We treat the agent's job search effort explicitly as part of the dynamic decision along with a binary employment choice. The optimal policy is shown to exist and to be of the stationary reservation-wage type. Based on the characterization of the optimal policy, we then show: (1) the value function exhibits inverse-L shaped indifference curves and hence is neither differentiable nor concave, (2) the optimal search effort is decreasing in the realized unmeasured utility shocks, and (3) the labor market history is semi-Markovian, These implications lead naturally to an estimable structural model of labor market histories.

JEL-codes: J64 D83 C41 (search for similar items in EconPapers)
Date: 1995

Downloads: (external link)
http://www.econ.duke.edu/Papers/Abstracts/abstract.95.13.html main text

Related works:
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: http://EconPapers.repec.org/RePEc:duk:dukeec:95-13

Access Statistics for this paper

More papers in Working Papers from Duke University, Department of Economics
Address: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
Series data maintained by Department of Economics Webmaster ().