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Worker heterogeneity, the job-finding rate, and technical change

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  • Basov, Suren
  • King, Ian
  • Uren, Lawrence

Abstract

We examine the implications of changes in the skill distribution on the equilibrium matching process and the job finding rate, using a directed search approach. Worker abilities are selected from a distribution while firms face heterogeneous entry costs and direct their job offers to workers. We identify conditions under which technical progress increases or decreases the job finding rate, allowing for entry and the effects of technical changes on heterogeneity. We find that the effects of skill-neutral technical progress on job finding rates are unambiguously non-negative, but the effects of skill-biased changes depend on the elasticity of vacancy costs. However, both skill-neutral and skill-biased technical changes are Pareto improving, ex ante, if all agents are risk neutral.

Suggested Citation

  • Basov, Suren & King, Ian & Uren, Lawrence, 2014. "Worker heterogeneity, the job-finding rate, and technical change," European Economic Review, Elsevier, vol. 70(C), pages 159-177.
    • Handle: RePEc:eee:eecrev:v:70:y:2014:i:c:p:159-177
    DOI: 10.1016/j.euroecorev.2014.04.008
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    Citations

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    Cited by:

    1. Jian Xin Heng & Benoit Julien & John Kennes & Ian King, 2016. "Job Qualities, Search Unemployment, and Public Policy," Discussion Papers Series 570, School of Economics, University of Queensland, Australia.
    2. Seyed Mohammadreza Davoodalhosseini, 2020. "Adverse Selection With Heterogeneously Informed Agents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(3), pages 1307-1358, August.
    3. Jorge Miranda-Pinto & Gang Zhang, "undated". "Trade Credit and Sectoral Comovement during the Great Recession," MRG Discussion Paper Series 4620, School of Economics, University of Queensland, Australia.
    4. Andrew John & Ian King, 2020. "Secret Search," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 3-35, February.
    5. Ian King & Frank Stähler, 2014. "International trade and directed search unemployment in general equilibrium," Canadian Journal of Economics, Canadian Economics Association, vol. 47(2), pages 580-604, May.
    6. Ian King & Frank Stähler, 2018. "Capital Utilization and Search Unemployment in Dynamic General Equilibrium," Discussion Papers Series 598, School of Economics, University of Queensland, Australia.

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    More about this item

    Keywords

    Directed search; Worker heterogeneity; Unemployment;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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