TY  - RPRT
        AU  - Holzner, Christian
AU  - Launov, Andrey
        TI  - Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation
        PY  - 2005/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1904
        UR  - https://www.iza.org/index.php/publications/dp1904
        AB  - We introduce different skill groups and production functions into the Burdett-Mortensen equilibrium search model. Supermodularity in the production process leads to a positive intrafirm wage correlation between skill groups. Theory implies that increasing returns to scale can lead to a unimodal earnings density with a decreasing right tail even in the absence of productivity dispersion. Our empirical results indicate economy-wide increasing returns to scale. We use the structural estimates of the production parameters to investigate whether private returns to education equal social returns. Our estimates suggest a positive welfare effect from increasing the share of medium-skilled agents in the workforce.
        KW  - wage correlation
KW  - social returns to education
KW  - search
        ER  -