Simultaneous equations models in applied search theory

This paper shows how standard simultaneous equations models arise in the analysis of survey data on wages and unemployment durations in the light of job search theory. Log-linear approximations to the key functional relations lead to ordinary log-linear simultaneous equations in which, moreover, specification error or heterogeneity terms are absorbed into the structural form error terms. Identifiability of structural parameters by exclusion restrictions can then be examined. An illustrative application of the method to data on elapsed durations and asking wages is given with results not inconsistent with search theory.