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Worker Flows under Mismatch

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  • William Hawkins

    (Yeshiva University)

Abstract

I study a dynamic model of matching between heterogeneous workers and heterogeneous jobs. Workers and jobs are attached to different labor markets, and within each labor market, workers and jobs are assigned to different locations, representing heterogeneity in the skills of workers and the skill requirements of jobs. A match between a worker and a job in a given labor market produces flow output that depends on the quality of their match, which is a decreasing function of the distance between them. The worker and the job split this output in a fixed ratio. Matching is frictionless within each labor market. Each period, the set of matches between workers and firms is such that no worker-job pair strictly prefer to be matched with each other than with their current partners. The model is consistent with evidence from the Current Population Survey on the cross-sectional and cyclical behavior of job-to-job transitions. Notably, a worker who recently experienced a job-to-job transition is more likely to undergo another.

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Paper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 479.

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Date of creation: 2013
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Handle: RePEc:red:sed013:479

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  1. James S. Costain & Michael Reiter, 2003. "Business cycles, unemployment insurance and the calibration of matching models," Economics Working Papers 872, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2006.
  2. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  3. Moen, E.R., 1995. "Competitive Search Equilibrium," Memorandum 37/1995, Oslo University, Department of Economics.
  4. Coen Teulings & Pieter Gautier, 2012. "Sorting and the output loss due to search frictions," CPB Discussion Paper 206, CPB Netherlands Bureau for Economic Policy Analysis.
  5. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
  6. Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers.
  7. William Hawkins, 2012. "Wage Determination and Labor Market Volatility under Mismatch," 2012 Meeting Papers 797, Society for Economic Dynamics.
  8. Coles, Melvyn G & Muthoo, Abhinay, 1998. "Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 235-60, April.
  9. P. Diamond, 1980. "Aggregate Demand Management in Search Equilibrium," Working papers 268, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Alain Delacroix & Shouyong Shi, 2003. "Directed Search On the Job and the Wage Ladder," Working Papers shouyong-03-04, University of Toronto, Department of Economics.
  11. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
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