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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 and how they are affected by aggregate labor market conditions. Our model helps explain various other features of labor markets, such as the size and persistence of the changes in income that workers experience due to displacements or job-to-job transitions, the length of job tenures and unemployment duration, and the amount of worker turnover in excess of job reallocation. 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, employment and aggregate output in the equilibrium. From a theoretical point of view, we study the extent to which the competitive equilibrium achieves an efficient allocation of resources.

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Paper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Conference Paper Series with number 0403.

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Date of creation: Mar 2004
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Handle: RePEc:san:cdmacp:0403

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Postal: Department of Economics, University of St. Andrews, Fife KY16 9AL
Phone: 01334 462420
Fax: 01334 462444
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Web page: http://www.st-andrews.ac.uk/cdma
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Cited by:
  1. Ricardo Lagos & Guillaume Rocheteau, 2009. "Liquidity in Asset Markets With Search Frictions," Econometrica, Econometric Society, vol. 77(2), pages 403-426, 03.
  2. Shintaro Yamaguchi, 2007. "Job Search, Bargaining, and Wage Dynamics," Department of Economics Working Papers 2007-03, McMaster University.
  3. Spiros Bougheas & Carl Davidson & Richard Upward & Peter Wright, . "Structural Adjustment, Turnover and Career Mobility," Discussion Papers 08/23, University of Nottingham, GEP.
  4. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-98, December.
  5. Nicolas L. Jacquet, 2007. "Inefficient Worker Turnover," Working Papers 17-2007, Singapore Management University, School of Economics.
  6. 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).
  7. 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).

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