DURATION TO FIRST JOB AND THE RETURN TO SCHOOLING - ESTIMATES FROM A SEARCH-MATCHING MODEL

This paper investigates the properties of the joint distribution of th e duration to the first post-schooling full-time job and of the accept ed wage for that job within a search-matching-bargaining theoretic mod el. The model provides an interpretation of the observations on durati on to first job and accepted wages that differentiates between behavio ural influences and market fundamentals in determining the accepted wa ge-schooling relationship. The return to schooling is appropriately me asured by differences in the wage offer distribution, which depends on ly on market fundamentals. We use data from the 1979 youth cohort of t he National Longitudinal Surveys of Labor Market Experience to follow several school-leaving cohorts of young males. A model which allows fo r five types of heterogeneous workers within schooling/race groups fit s the duration and wage data well for all such groups. Offer probabili ties for all groups are estimated to be close to one. Mean offered wag es are about $1000 less than mean accepted wages and the internal annu al rate of return for attending college relative to graduating from hi gh school is 32% for blacks and 17% for whites.