Collaborative Research: Interpreting the Duration to First Job and Accepted Wages in a Bargaining Model: An Empirical Investigation of Schooling and Race Differences

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This project focuses on the transition period between leaving school and obtaining one's first full-time job. It is generally observed that the difficulty in obtaining the first job increases the longer one is without a job, and that the wage received on the first deceases as well with the length of the search period. In addition, groups which have shorter transition periods also tend to have higher wages. These observations are not easily reconciled within standard economic models of job search. It has been shown that a bargaining model in which the value of the firm-worker pairing is split according to each party's value of continuing to search can potentially explain these empirical regularities. The purpose of this research is to estimate rigorously such a bargaining model using data on the length of the transition period and wages for individuals from different race-schooling groups. This research is important because estimation will not only provide explanations for the data, but also will enable one to analyze the impact of alternative intervention policies such as minimum wages and unemployment compensation on the school-to-work transition.