 |
We set up a model with on-the-job search in which firms infrequently post vacancies for
which workers occasionally apply. The model nests the standard job ladder and stockflow
models as special cases while remaining analytically tractable and easy to estimate
from standard panel data sets. Structurally estimating the model, the parameters are
significantly different from the stock-flow or the job ladder model. Further, the estimated
parameters governing workers search behavior are found to be consistent with recent
survey evidence documented in Faberman et al. (2016). The search behavior implied by
the standard job ladder model significantly understates the search option associated with
employment (and thus underestimates the replacement ratio). Finally, the standard model
is unable to generate the decline in the job finding rate and starting wage with duration of
unemployment, both of which are present in our data.
