%0 Report
        %A Holzner, Christian
%A Launov, Andrey
        %T Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation
        %D 2005
        %8 2005 Dec
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 1904
        %U https://www.iza.org/publications/dp1904
        %X 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.
        %K wage correlation
%K social returns to education
%K search