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Excess Worker Reallocation


  • Giuseppe Moscarini


Workers face a trade-off between macroeconomic and individual incentives to work in different occupations/industries; namely, between search frictions and personal comparative advantages. Workers endowed with heterogeneous multi-dimensional skills search for jobs that require different skill combinations. In equilibrium, specialized individuals contact few, selected types of vacancies, where they are likely to be hired; those with weak comparative advantages are seldom chosen among competing applicants, thus seek any job type. In a tight labour market, comparative advantages dominate waiting costs: offsetting labour mobility across industries/occupations—Excess Worker Reallocation—is lower and matches are more successful, consistently with direct and indirect evidence.

Suggested Citation

  • Giuseppe Moscarini, 2001. "Excess Worker Reallocation," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 593-612.
  • Handle: RePEc:oup:restud:v:68:y:2001:i:3:p:593-612.

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    References listed on IDEAS

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