An empirical equilibrium job search model with continuously distributed heterogeneity of workers' opportunity costs of employment and firms productivities, and search on the job

In this paper we present and estimate a synthesis of previous equilibrium search models: allowing for continuous distributions of workers opportunity costs of employment, as well as firms’ productivities. The model allows for on-the-job search, and we assume that job offer arrival rates for workers are independent of their labor market state. We derive the theoretical implications of these assumptions, we provide simulations, and we develop a semi-parametric estimation procedure that we apply to a dataset of individual labor market histories.