The information content of wage and duration data in a search model
Estimates of the parameters of the wage offer density and the offer arrival process of a simple search model are presented in this paper. The optimality constraint from the search model is treated as a restriction and its effect on parameter estimates is analysed. Estimates from wage data alone and estimates from duration data alone can be interpreted as unrestricted estimates while estimates obtained from wage and duration data together can be interpreted as restricted estimates. This interpretation allows a test of the optimality constraint which is rejected by the data used. Estimates reveal a substantial difference in the information contained in wages and the information contained in durations, but benefit elasticities are consistent with findings from previous studies.