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Comparative Statics in Dynamic Programming Models with an Application to Job Search

Author

Listed:
  • Albrecht, James W.

    (Georgetown University)

  • Holmlund, Bertil

    (Uppsala University)

  • Lang, Harald

    (Research Institute of Industrial Economics (IFN))

Abstract

This paper presents a technique for qualitative comparative statics analysis in dynamic programming models. Let the value function v be the fixed point of a contraction mapping which depends differentially on some exogenous parameter theta. Then the derivative of v with respect to theta exists and is also the fixed point of a contraction mapping. Since this derivative is the fixed point of a contraction mapping its qualitative properties can be investigated using mathematical induction. This comparative statics methodology is illustrated with an application to a model of job search.

Suggested Citation

  • Albrecht, James W. & Holmlund, Bertil & Lang, Harald, 1986. "Comparative Statics in Dynamic Programming Models with an Application to Job Search," Working Paper Series 172, Research Institute of Industrial Economics, revised Aug 1991.
    • Handle: RePEc:hhs:iuiwop:0172
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    References listed on IDEAS

    as
    1. Araujo, A & Scheinkman, Jose A, 1977. "Smoothness, Comparative Dynamics, and the Turnpike Property," Econometrica, Econometric Society, vol. 45(3), pages 601-620, April.
    2. Sharma, Sunil, 1987. "On the existence and uniqueness of value functions in models of labor market dynamics," Economics Letters, Elsevier, vol. 24(4), pages 349-352.
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    Cited by:

    1. van den Berg, Gerard J. & van Vuuren, Aico, 2010. "The effect of search frictions on wages," Labour Economics, Elsevier, vol. 17(6), pages 875-885, December.
    2. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 527-588, July.
    3. Judd, Kenneth L., 1996. "Approximation, perturbation, and projection methods in economic analysis," Handbook of Computational Economics, in: H. M. Amman & D. A. Kendrick & J. Rust (ed.), Handbook of Computational Economics, edition 1, volume 1, chapter 12, pages 509-585, Elsevier.
    4. van den Berg, Gerard J, 1995. "Wage dispersion and mobility," Economic Modelling, Elsevier, vol. 12(1), pages 15-27, January.
    5. Bassem Ben Halima & Mohamed Ali Ben Halima, 2009. "Time Preferences and Job Search: Evidence from France," LABOUR, CEIS, vol. 23(3), pages 535-558, September.
    6. van Ommeren, Jos & Rietveld, Piet & Nijkamp, Peter, 1997. "Commuting: In Search of Jobs and Residences," Journal of Urban Economics, Elsevier, vol. 42(3), pages 402-421, November.
    7. Kaas, Leo, 2023. "Block-recursive equilibria in heterogeneous-agent models," Journal of Economic Theory, Elsevier, vol. 212(C).
    8. Jos Van Ommeren & Gerard J. Van Den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 541-563, August.
    9. Koning, Pierre & Berg, Gerard J. van den & Ridder, Geert, 1997. "A structural analysis of job search methods and subsequent wages," Serie Research Memoranda 0036, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.

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    More about this item

    Keywords

    Qualitative comparative statics analysis; dynamic programming; job search model;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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