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Matching, Sorting and Wages

Author

Listed:
  • Jean-Marc Robin

    (PSE & UCL)

  • Costas Meghir

    (UCL & IFS)

  • Jeremy Lise

    (UCL & IFS)

Abstract

We develop an empirical search-matching model with productivity shocks so as to analyze policy interventions in a labour market with heterogeneous agents. To achieve this we develop an equilibrium model of wage determination and employment, which is consistent with key empirical facts. As such our model extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates long-term contracts, on-the-job search and counter-offers, and a vacancy creation and destruction process linked to productivity shocks. Importantly, the model allows for the possibility of assortative matching between workers and jobs, a feature that had been ruled out by assumption in the empirical equilibrium search literature to date.

Suggested Citation

  • Jean-Marc Robin & Costas Meghir & Jeremy Lise, 2009. "Matching, Sorting and Wages," 2009 Meeting Papers 180, Society for Economic Dynamics.
  • Handle: RePEc:red:sed009:180
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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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