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The macro-dynamics of sorting between workers and firms

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  • Jeremy Lise

    ()
    (Institute for Fiscal Studies and University College London)

  • Jean-Marc Robin

    ()
    (Institute for Fiscal Studies and Sciences Po)

Abstract

We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterises the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labour market data from 1951-2007 and predict the fit for 2008-12. We use the model to measure the cyclicality of mismatch between workers and jobs.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W13/22.

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Date of creation: Aug 2013
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Handle: RePEc:ifs:ifsewp:13/22

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Keywords: On-the-job search; heterogeneity; aggregate fluctuations; mis-match;

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References

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  1. Postel-Vinay & Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Working Papers 155908, Institut National de la Recherche Agronomique, France.
  2. Giuseppe Moscarini & Fabien Postel-Vinay, 2013. "Stochastic Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1545-1581.
  3. Guido Menzio & Shouyong Shi, 2008. "Efficient Search on the Job and the Business Cycle, Second Version," PIER Working Paper Archive 09-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Feb 2009.
  4. Hagedorn, Marcus & Manovskii, Iourii, 2008. "The cyclical behavior of equilibrium unemployment and vacancies revisited," Working Paper Series 0853, European Central Bank.
  5. Moscarini, Giuseppe & Thomsson, Kaj, 2006. "Occupational and Job Mobility in the US," Working Papers 19, Yale University, Department of Economics.
  6. Guido Menzio & Shouyong Shi, 2009. "Block Recursive Equilibria for Stochastic Models of Search on the Job," NBER Working Papers 14907, National Bureau of Economic Research, Inc.
  7. Guido Menzio & Shouyong Shi, 2008. "Efficient Search on the Job and the Business Cycle," Working Papers tecipa-327, University of Toronto, Department of Economics.
  8. Jean-Marc Robin, 2010. "On the dynamics of unemployment and wage distributions," CeMMAP working papers CWP04/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  9. Guido Menzio & Shouyong Shi, 2010. "Directed Search on the Job, Heterogeneity, and Aggregate Fluctuations," Working Papers tecipa-390, University of Toronto, Department of Economics.
  10. repec:ese:iserwp:2012-07 is not listed on IDEAS
  11. Melvyn G. Coles & Dale T. Mortensen, 2012. "Equilibrium Labor Turnover, Firm Growth and Unemployment," NBER Working Papers 18022, National Bureau of Economic Research, Inc.
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Cited by:
  1. Carlos Carrillo-Tudela & Ludo Visschers, 2013. "Unemployment and endogenous reallocation over the business cycle," Economics Working Papers we1302, Universidad Carlos III, Departamento de Economía.

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