Labor-market Volatility in a Matching Model with Worker Heterogeneity and Endogenous Separations
AbstractRecessions are times when the quality of the unemployment pool is lower, because entry into unemployment is biased in favor of low-productivity workers. I develop a search and matching model with worker heterogeneity and endogenous separations that has this feature. I show that in a recession a compositional shift in unemployment towards low-productivity workers, due an increase in job separations, lowers the matching effectiveness of searching firms, thereby causing their average recruiting cost to rise. This acts to further depress vacancy creation in a recession. In contrast to most models that allow for endogenous separations, this model generates a realistic Beveridge curve correlation.
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Bibliographic InfoPaper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 13-2010.
Length: 25 pages
Date of creation: Dec 2010
Date of revision:
Contact details of provider:
Web page: http://www.econ.ucy.ac.cy
search and matching; endogenous separations; worker heterogeneity; un-employment; vacancies volatility;
Other versions of this item:
- Chassamboulli, Andri, 2013. "Labor-market volatility in a matching model with worker heterogeneity and endogenous separations," Labour Economics, Elsevier, vol. 24(C), pages 217-229.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-DGE-2010-12-18 (Dynamic General Equilibrium)
- NEP-LAB-2010-12-18 (Labour Economics)
You can help add them by filling out this form.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Labor-market Volatility in a Matching Model with Worker Heterogeneity and Endogenous Separations
by Christian Zimmermann in NEP-DGE blog on 2011-01-10 04:01:10
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- Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
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- Carrillo-Tudela, Carlos & Visschers, Ludo, 2012. "Unemployment and Endogenous Reallocation over the Business Cycle," MPRA Paper 43702, University Library of Munich, Germany.
- Ludo Visschers & Carlos Carrillo-Tudela, 2011. "Unemployment and Endogenous Reallocation over the Business Cycle," 2011 Meeting Papers 1101, Society for Economic Dynamics.
- Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009.
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