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It'S About Time: Implications Of The Period Length In An Equilibrium Search Model

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  • Ronald Wolthoff

Abstract

Empirical evidence suggests that transitions between employment states are highly clustered around the first day of each workweek or month. I analyze the effect of this phenomenon by presenting an equilibrium search model in which the period length is a parameter determining the degree of clustering. Infinitesimally short periods result in a continuous‐time model with bilateral meetings, whereas longer time periods introduce the possibility of recall or simultaneity of job offers. In this environment, I show that the period length has a profound effect on equilibrium outcomes, including the unemployment rate, unemployment duration, and the cross‐sectional wage distribution.

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  • Ronald Wolthoff, 2014. "It'S About Time: Implications Of The Period Length In An Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(3), pages 839-867, August.
  • Handle: RePEc:wly:iecrev:v:55:y:2014:i:3:p:839-867
    DOI: 10.1111/iere.12073
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    More about this item

    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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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