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A model of job and worker flows

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  • Nobuhiro Kiyotaki
  • Ricardo Lagos

Abstract

We develop a model of gross job and worker flows and use it to study how the wages, permanent incomes, and employment status of individual workers evolve over time. Our model helps explain various features of labor markets, such as the amount of worker turnover in excess of job reallocation, the length of job tenures and unemployment duration, and the size and persistence of the changes in income that workers experience due to displacements or job-to-job transitions. We also examine the effects that labor market institutions and public policy have on the gross flows, as well as on the resulting wage distribution and employment in the equilibrium. From a theoretical standpoint, we propose a notion of competitive equilibrium for random matching environments, and study the extent to which it achieves an efficient allocation of resources.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 358.

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Date of creation: 2006
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Publication status: Published in Journal of Political Economy> (Vol. 115, No. 5, October 2007, pp. 770-819)
Handle: RePEc:fip:fedmsr:358

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Keywords: Labor market ; Labor turnover ; Labor mobility;

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Citations

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Cited by:
  1. Keisuke Kawata, 2013. "Work Hour Mismatch and On-the-job Search," IDEC DP2 Series 3-6, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
  2. Davis, Steven J. & Faberman, R. Jason & Haltiwanger, John C., 2005. "The Flow Approach to Labor Markets: New Data Sources, Micro-Macro Links and the Recent Downturn," IZA Discussion Papers 1639, Institute for the Study of Labor (IZA).
  3. Shintaro Yamaguchi, 2006. "Job Search, Bargaining, and Wage Dynamics," 2006 Meeting Papers 54, Society for Economic Dynamics.
  4. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2007. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," NBER Working Papers 13674, National Bureau of Economic Research, Inc.
  5. Guillaume Rocheteau & Ricardo Lagos, 2008. "Liquidity in asset markets with search frictions," Working Paper 0804, Federal Reserve Bank of Cleveland.
  6. Nicolas L. Jacquet, 2007. "Inefficient Worker Turnover," Working Papers 17-2007, Singapore Management University, School of Economics.
  7. Spiros Bougheas & Carl Davidson & Richard Upward & Peter Wright, . "Structural Adjustment, Turnover and Career Mobility," Discussion Papers 08/23, University of Nottingham, GEP.

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