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Directed search over the life cycle

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  • Ludo Visschers

    (Carlos III)

  • Irina Telyukova

    (UCSD)

  • Guido Menzio

    (UPenn)

Abstract

How much of a worker's lifetime experience in the labor market is due to human capital accumulation versus luck? We build a life-cycle model of directed search in the labor market, in which workers move between the states of unemployment, employment and across employers because of differences in labor market experience and in idiosyncratic productivity of different rm-worker matches. We calibrate the model to age-independent facts based on the SIPP, and find that it is able to match key life-cycle facts in the labor market, including the rates of transition between labor market states by age and the average age-earnings profile. Using the model, we then decompose the life-cycle profiles of wages and transitions into human capital effects, age-related horizon effects and search effects. We find that search frictions play a very important role in the workers' life-cycle experience

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 1360.

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Date of creation: 2011
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Handle: RePEc:red:sed011:1360

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References

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  1. Hamish Low & Costas Meghir & Luigi Pistaferri, 2006. "Wage risk and employment risk over the life cycle," IFS Working Papers, Institute for Fiscal Studies W06/27, Institute for Fiscal Studies.
  2. Guido Menzio & Shouyong Shi, 2010. "Directed Search on the Job, Heterogeneity, and Aggregate Fluctuations," Working Papers, University of Toronto, Department of Economics tecipa-390, University of Toronto, Department of Economics.
  3. Arnaud Chéron & Jean-Olivier Hairault & François Langot, 2011. "Age-Dependent Employment Protection," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00623282, HAL.
  4. Menzio, Guido & Shi, Shouyong, 2010. "Block recursive equilibria for stochastic models of search on the job," Journal of Economic Theory, Elsevier, Elsevier, vol. 145(4), pages 1453-1494, July.
  5. Postel-Vinay, Fabien & Turon, Hélène, 2006. "On-the-Job Search, Productivity Shocks and the Individual Earnings Process," IZA Discussion Papers 2006, Institute for the Study of Labor (IZA).
  6. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, Econometric Society, vol. 72(1), pages 1-32, 01.
  7. Arnaud Ch�ron & Jean-Olivier Hairault & Fran�ois Langot, 2013. "Life-Cycle Equilibrium Unemployment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 31(4), pages 843 - 882.
  8. Manolis Galenianos & Philipp Kircher, 2009. "Directed search with multiple job applications," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 29702, London School of Economics and Political Science, LSE Library.
  9. Aspen Gorry, 2012. "Experience and Worker Flows," 2012 Meeting Papers, Society for Economic Dynamics 154, Society for Economic Dynamics.
  10. Guido Menzio & Shouyong Shi, 2011. "Efficient Search on the Job and the Business Cycle," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 119(3), pages 468 - 510.
  11. Fatih Guvenen & Anthony Smith, 2010. "Inferring labor income risk from economic choices: an indirect inference approach," Staff Report, Federal Reserve Bank of Minneapolis 450, Federal Reserve Bank of Minneapolis.
  12. Postel-Vinay & Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Working Papers 155908, Institut National de la Recherche Agronomique, France.
  13. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, MIT Press, vol. 8(5), pages 1034-1076, 09.
  14. Julen Esteban-Pretel & Junichi Fujimoto, 2011. "Life-Cycle Labor Search with Stochastic Match Quality," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-783, CIRJE, Faculty of Economics, University of Tokyo.
  15. Katharine G. Abraham & Robert Shimer, 2001. "Changes in Unemployment Duration and Labor Force Attachment," NBER Working Papers 8513, National Bureau of Economic Research, Inc.
  16. Gadi Barlevy, 2008. "Identification of Search Models using Record Statistics," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 29-64.
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  1. Directed Search over the Life Cycle
    by Christian Zimmermann in NEP-DGE blog on 2012-01-20 22:54:28
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