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On-the-Job Search in a Matching Model with Heterogenous Jobs and Workers

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  • Juan J. Dolado
  • Marcel Jansen
  • Juan F. Jimeno

Abstract

This paper considers a matching model with heterogenous jobs (unskilled and skilled) and workers ( low and high- educated) which allows for on-the-job search by mismatched workers. The latter are high-educated workers who transitorily accept unskilled jobs and continue to search for skilled jobs. Our findings show that on-the-job search introduces an additional source of between and within- group wage inequality. Furthermore, the higher quit rate of mismatched workers exerts a negative externality on unskilled jobs and weakens the labour market position of low-educated workers. This last feature changes the effects of skill-biased technological change and it alters the response of the labour market to shifts in the skill distribution.

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Paper provided by FEDEA in its series Working Papers with number 2003-21.

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Handle: RePEc:fda:fdaddt:2003-21

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