Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates
Luca Flabbi and James Mabli ()
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Luca Flabbi and James Mabli: Department of Economics, Georgetown University, https://sites.google.com/site/lucaflabbi/
Authors registered in the RePEc Author Service: Luca Flabbi
Working Papers from Georgetown University, Department of Economics
We develop and estimate an household search model to evaluate if ignoring that labor market decisions are taken at the household level - as usually done in search models of the labor market - has relevant empirical consequences. We evaluate the impact of this potential mispecification error by comparing parameters estimates under different specifications, by running a specification test, and by generating simulations to compute cross-sectional and lifetime inequality measures. We build on previous literature (Dey and Flinn (2008) and Guler, Guvenen and Violante (2011)) to propose a novel identification strategy of the risk aversion parameters. We find that ignoring the household as the actual unit of decision-making leads to estimate gender differentials in average wage offers two and a half times larger and to erroneously conclude that women experience higher inequality in wages and earnings than men.
Keywords: Household Search; Inequality; Structural Estimation (search for similar items in EconPapers)
JEL-codes: J64 D63 C63 (search for similar items in EconPapers)
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Working Paper: Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates (2012)
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Persistent link: http://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~12-12-03
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Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036
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