Equilibrium search with continuous productivity dispersion: Theory and nonparametric estimation

In this article we develop an equilibrium search model with a continuous di stribution of firm productivity types within a given labor market. We chara cterize equilibrium, derive expressions for the endogenous equilibrium wage distributions, and characterize the set of wage distributions that can be generated by the model. We develop a structural nonparametric estimation me thod for the productivity distribution. We estimate the model using French longitudinal survey data on labor supply, and we compare the results with t hose from a French panel data set of firms. The results are informative on the degree to which firms exploit search frictions.