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A Discrete-Time Stochastic Model of Job Matching

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  • Smith, Tony E
  • Zenou, Yves

Abstract

In this Paper, an explicit micro scenario is developed which yields a well-defined aggregate job-matching function. In particular, a stochastic model of job-matching behaviour is constructed in which the system steady state is shown to be approximated by an exponential-type matching function, as the population becomes large. This steady-state approximation is first derived for fixed levels of both wages and search intensities, where it is shown (without using a free-entry condition) that there exists a unique equilibrium. It is then shown that if job searchers are allowed to choose their search intensities optimally, then this model is again consistent with a unique steady state. Finally, the assumption of a fixed wage is relaxed, and an optimal ‘offer wage’ is derived for employers.

Suggested Citation

  • Smith, Tony E & Zenou, Yves, 2001. "A Discrete-Time Stochastic Model of Job Matching," CEPR Discussion Papers 3044, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3044
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    References listed on IDEAS

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    2. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
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    Citations

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    Cited by:

    1. Calvo-Armengol, Antoni & Zenou, Yves, 2005. "Job matching, social network and word-of-mouth communication," Journal of Urban Economics, Elsevier, vol. 57(3), pages 500-522, May.
    2. Neugart, Michael, 2006. "Labor market policy evaluation with an agent-based model," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-113, Social Science Research Center Berlin (WZB).
    3. Smith, Tony E. & Zenou, Yves, 2003. "Spatial mismatch, search effort, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 54(1), pages 129-156, July.
    4. Anthony E. Smith & Yves Zenou, 2003. "A Discrete-Time Stochastic Model of Job Matching," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 54-79, January.
    5. Gabriele R. & Fagiolo G. & Dosi G., 2004. "Towards an Evolutionary Interpretation of Aggregate Labor Market Regularities," Computing in Economics and Finance 2004 84, Society for Computational Economics.
    6. Zenou, Yves, 2008. "Job search and mobility in developing countries. Theory and policy implications," Journal of Development Economics, Elsevier, vol. 86(2), pages 336-355, June.
    7. repec:spo:wpecon:info:hdl:2441/8001 is not listed on IDEAS
    8. Sylvain Barde, 2007. "Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions," Sciences Po publications 07/02, Sciences Po.
    9. Matteo Richiardi, 2006. "Toward a Non-Equilibrium Unemployment Theory," Computational Economics, Springer;Society for Computational Economics, vol. 28(4), pages 421-446, November.
    10. Matteo Richiardi, 2006. "Toward a Non-Equilibrium Unemployment Theory," Computational Economics, Springer;Society for Computational Economics, vol. 27(1), pages 135-160, February.
    11. Neugart, Michael, 2008. "Labor market policy evaluation with ACE," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 418-430, August.
    12. Anthony E. Smith & Yves Zenou, 2003. "A Discrete-Time Stochastic Model of Job Matching," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 54-79, January.

    More about this item

    Keywords

    large population approximation; matching function; optimal search intensity;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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