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Labor-market volatility in a matching model with worker heterogeneity and endogenous separations

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  • Chassamboulli, Andri

Abstract

This paper shows that introducing worker heterogeneity into a standard search and matching model can help increase the volatility of unemployment without violating the tight negative correlation between vacancies and unemployment, i.e., the Beveridge curve. In the model, periods of high job destruction and unemployment correspond with periods of more severe mismatch between the demands of firms and the qualifications of job seekers. A more severe mismatch translates into fewer successful employment matches conditional on the number of contacts per firm and, as a result, into a higher expected recruitment cost per worker hired, with adverse effects on incentives to open vacancies.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:217-229
    DOI: 10.1016/j.labeco.2013.08.010
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    Cited by:

    1. repec:eee:labeco:v:50:y:2018:i:c:p:20-31 is not listed on IDEAS
    2. Ludo Visschers & Carlos Carrillo-Tudela, 2011. "Unemployment and Endogenous Reallocation over the Business Cycle," 2011 Meeting Papers 1101, Society for Economic Dynamics.
    3. Ortego-Marti, Victor, 2017. "The Cyclical Behavior Of Unemployment And Vacancies With Loss Of Skills During Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 21(06), pages 1277-1304, September.
    4. Lalé, Etienne, 2018. "Loss of skill and labor market fluctuations," Labour Economics, Elsevier, vol. 50(C), pages 20-31.
    5. Julien Albertini & Arthur Poirier, 2014. "Discount Factor Shocks and Labor Market Dynamics," SFB 649 Discussion Papers SFB649DP2014-033, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    6. Carlo Gianelle & Giuseppe Tattara, 2014. "Vacancy chains and the business cycle. Stringing together job-to-job transitions in micro data," International Journal of Manpower, Emerald Group Publishing, vol. 35(8), pages 1212-1235, October.

    More about this item

    Keywords

    Search and matching; Endogenous separations; Worker heterogeneity; Unemployment and vacancies volatility;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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

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