Measuring productivity differences in equilibrium search models

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  • 0000903

    Final published version, 314 KB, PDF document

  • Gauthier Lanot, Denmark
  • George R. Neumann, Denmark
  • Centre for Labour Market and Social Research
Equilibrium search models require unobserved heterogeneity in productivity to fit observed wage distribution data, but provide no guidance about the location parameter of the heterogeneity. In this paper we show that the location of the productivity heterogeneity implies a mode in a kernel density estimate of the wage distribution. The number of such modes and their location are identified using bump hunting techniques due to Silverman (1981). These techniques are applied to Danish panel data on workers and firms. These estimates are used to assess the importance of employer wage policy.
Original languageEnglish
Publication statusPublished - 1996

    Research areas

  • Produktivitet, HHÅ forskning, Bandwith selection, Equilibrium search, Kernel density, Multimodal

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