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The Balance Condition in Search-and-Matching Models

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  • Stephan Lauermann
  • Georg Nöldeke
  • Thomas Tröger

Abstract

Most of the literature that studies frictional search-and-matching models with heterogeneous agents and random search investigates steady-state equilibria. Steady-state equilibrium requires, in particular, that the flows of agents into and out of the population of unmatched agents balance. We investigate the structure of this balance condition, taking agents' matching behavior as given. Building on the "fundamental matching lemma" for quadratic search technologies in Shimer and Smith (2000), we establish existence, uniqueness, and comparative-static properties of the solution to the balance condition for any search technology satisfying minimal regularity conditions. Implications for the existence and structure of steady-state equilibria are noted.

Suggested Citation

  • Stephan Lauermann & Georg Nöldeke & Thomas Tröger, 2019. "The Balance Condition in Search-and-Matching Models," CRC TR 224 Discussion Paper Series crctr224_2019_120, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2019_120
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    References listed on IDEAS

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    Keywords

    Search; Matching; Steady State;
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