Competitive versus random search with bargaining: An empirical comparison

In this paper, we estimate and nest the canonical competitive search model of Moen (1997) inside a random search model with bargaining. The nesting allows us to compare the two models predictions, or comparative statics, using the same empirical estimation. Furthermore, nesting provides likelihood ratio tests that demonstrate the empirical differences between competitive search and random search with bargaining. The differences between the two models include whether workers search in different “sub-markets” with different levels of productivity, they direct the search to each firm/sub-market, and the wage they receive is split efficiently via Hosios (1990).