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Transition from School to Work

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Submitted By dita87
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Transition from School to Work

Senior Thesis
(Progress Report)
Theoretical Specification

Nowadays the young generation of the United States encounters some major difficulties in finding decent jobs immediately after completing their studies. Such obstacles will affect their early labor market experience, wages and the time spent unemployed. This paper will focus on the estimation of job searches given the restrictions implemented in a job search theory. Moreover, this structural approach helps view the market in a different way. On one hand, the labor market is a place where numerous jobs are offered and there are only few takers and on the other hand, there are only few jobs available but many takers. As an addition, the structural approach produces predictions about the dynamics in labor force for each individual.[1] As a guiding paper I will follow Kenneth Wolpin (1987)’s paper. Standard discrete-time search model will be applied, meaning a non-continuous time search model. It includes the following characteristics:
-First, the search horizon is limited since graduates will not be able to borrow due to a lack of future income;
- Second, the probability of receiving a job offer (given the fixed length of time) may be dependent on job search duration;
- Third, there is a cost of getting a job offer in a given period, which is not a subject to choice. This cost represents an opportunity cost of search time and it is a forgone leisure;
- Fourth, in this model jobs last for a lifetime and once an individual is employed there will be no capital market constraints;
- Fifth, the wage offers are arbitrary and previous offers cannot be recalled. However, this model is incomplete. In order for the model to be complete, an individual should accept the first job offer at the end of the search job horizon. The data I will be using is taken

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