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Search, layoffs and reservation wages when job offers follow a stochastic process

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  • Svetlana Boyarchenko

    (The University of Texas at Austin)

Abstract

Despite the fact that the empirical data indicate the presence of non- stationarity in wage offer distributions, the majority of job-search models are stationary. We model logs of wage offers as a Markov process with i.i.d. increments and solve two typical job-search models for reservation wages, value functions and expected individual duration of unemployment. All solutions are in the closed form and admit interpretation in terms of expected present values of certain streams of payoffs.

Suggested Citation

  • Svetlana Boyarchenko, 2004. "Search, layoffs and reservation wages when job offers follow a stochastic process," Macroeconomics 0409014, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0409014
    Note: Type of Document - pdf; pages: 29
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    References listed on IDEAS

    as
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    2. van den Berg, Gerard J, 1999. "Empirical Inference with Equilibrium Search Models of the Labour Market," Economic Journal, Royal Economic Society, vol. 109(456), pages 283-306, June.
    3. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    4. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
    5. Gronau, Reuben, 1971. "Information and Frictional Unemployment," American Economic Review, American Economic Association, vol. 61(3), pages 290-301, June.
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    More about this item

    Keywords

    reservation wage; supremum process; Wiener-Hopf factorization;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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