Evaluating Search And Matching Models Using Experimental Data

This paper introduces an innovative test of search and matching models using the exogenous variation available inexperimental data. We take an off-the-shelf Pissarides matching model and calibrate it to data on thecontrol group from a randomized social experiment. We then simulate a program group from arandomized experiment within the model. As a measure of the performance of the model, we compare the outcomes ofthe program groups from the model and from the randomized experiment. We illustrate our methodology using theCanadian Self-Sufficiency Project (SSP), a social experiment providing a time limited earnings supplement forIncome Assistance recipients who obtain full time employment within a 12 month period. We find two features of themodel are consistent with the experimental results: endogenous search intensity and exogenous jobdestruction. We find mixed evidence in support of the assumption of fixed hours of labor supply. Finally, we finda constant job destruction rate is not consistent with the experimental data in this context.