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Stock-flow matching

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  • Ebrahimy, Ehsan
  • Shimer, Robert

Abstract

We develop the implications of the stock-flow matching model for unemployment, vacancies, and worker flows. Workers and jobs are heterogeneous, so most worker-job pairs cannot profitably match, leading to the coexistence of unemployment and vacancies. Productivity shocks cause fluctuations in the number of jobs, which in turn cause fluctuations in other labor market variables. We derive exact expressions for employment and for worker transition rates in a finite economy and analyze their limiting behavior in a large economy. A calibrated version of the model is consistent with the observed co-movement and volatility of labor market variables.

Suggested Citation

  • Ebrahimy, Ehsan & Shimer, Robert, 2010. "Stock-flow matching," Journal of Economic Theory, Elsevier, vol. 145(4), pages 1325-1353, July.
  • Handle: RePEc:eee:jetheo:v:145:y:2010:i:4:p:1325-1353
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    References listed on IDEAS

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    Cited by:

    1. Ludo Visschers & Carlos Carrillo-Tudela, 2011. "Unemployment and Endogenous Reallocation over the Business Cycle," 2011 Meeting Papers 1101, Society for Economic Dynamics.
    2. Carlos Usabiaga & Pablo Álvarez de Toledo & Fernando Núñez, 2013. "Labour Market Segmentation, Clusters, Mobility And Unemployment Duration With Individual Microdata," EcoMod2013 5688, EcoMod.
    3. Carlos Usabiaga & Fernando Núñez & Pablo Álvarez de Toledo, 2013. "Segmentación del mercado de trabajo, clusters, movilidad y duración de desempleo con datos individuales," Economic Working Papers at Centro de Estudios Andaluces E2013/02, Centro de Estudios Andaluces.
    4. William Hawkins & Carlos Carrillo-Tudela, 2014. "A Generalized Model of Stock-Flow Matching," 2014 Meeting Papers 1380, Society for Economic Dynamics.
    5. Peter A. Diamond & Ayşegül Şahin, 2016. "Disaggregating the Matching Function," NBER Working Papers 22965, National Bureau of Economic Research, Inc.
    6. Álvarez de Toledo, Pablo & Núñez, Fernando & Usabiaga, Carlos, 2014. "An empirical approach on labour segmentation. Applications with individual duration data," Economic Modelling, Elsevier, vol. 36(C), pages 252-267.
    7. Hutter, Christian & Weber, Enzo, 2014. "Forecasting with a mismatch-enhanced labor market matching function," IAB Discussion Paper 201416, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. repec:bla:obuest:v:79:y:2017:i:1:p:101-123 is not listed on IDEAS

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