Font Size: 

The aim of this paper is to estimate an equilibrium job search model with heterogeneity in productivities of firms using longitudinal microdata from the 2009 Brazilian Monthly Employment Survey (PME). Two mechanisms of wage determination are considered: wage posting by monopsonistic firms and Nash bilateral bargaining. In order to estimate the model, we use the non-parametric method developed by Bontemps, Robin and van den Berg (2000). There is significant heterogeneity among the estimated structural parameters for the six metropolitan regions. Our (indirect) testing procedure supports the model with wage determination through bargaining and rejects the wage posting alternative. Furthermore, workers from more developed regions of Brazil experience higher levels of welfare due to reduced monopsonic power from firms. Finally, we suggest an improvement of public policies in order to mitigate the considerable cost of information existing in the labor markets under analysis.

Search Theory; Unemployment Duration; Nonparametric Methods