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Modeling Matched Job-Worker Flows

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Dale T. Mortensen (Northwestern University)

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Abstract

What can one infer about labor market flows from matched employer- employee panel data? The purpose of this paper is to sketch possible answers to this question. A general but simple labor market equilibrium model of hire and separation flows is developed in the paper. The model embodies the hypothesis that worker productivity differs across employers and that worker and employer flows reflect responses to these differences in a labor market characterized by friction. In the modeled market, each agent acts optimally taking as given the wage offer distribution and market tightness and these in turn are determined by their collective action. The existence of a labor market equilibrium is established under two different wage determination models: rent sharing and wage posting. A demonstration that market flow parameters, search and recruiting effort functions, and the equilibrium wage distribution can be estimated with matched job-work flow data is the principal contribution of the paper.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1493.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1493

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  1. P. Bingley & T. Eriksson & A. Werwatz & N. Westergard-Nielsen, . "Beyond "Manucentrism " - Some Fresh Facts About Job and Worker Flows," Sonderforschungsbereich 373 1999-74, Humboldt Universitaet Berlin.
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  2. Bertola, Giuseppe & Caballero, Ricardo J, 1994. "Cross-Sectional Efficiency and Labour Hoarding in a Matching Model of Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 435-56, July. [Downloadable!] (restricted)
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  3. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
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  1. van den Berg, Gerard J, 2005. "Revolutionary Effects of New Information Technologies," CEPR Discussion Papers 5147, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Giuseppe Bertola & Pietro Garibaldi, 2001. "Wages and the Size of Firms in Dynamic Matching Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 335-368, April. [Downloadable!] (restricted)
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  3. Galindo-Rueda, Fernando, 2002. "Endogenous Wage and Capital Dispersion, On-the-Job Search and the Matching Technology," IZA Discussion Papers 625, Institute for the Study of Labor (IZA). [Downloadable!]
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