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A Discrete-Time Stochastic Model of Job Matching

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  • Zenou, Yves
  • Smith, Tony

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

  • Zenou, Yves & Smith, Tony, 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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    21. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
    22. Peters, Michael, 1991. "Ex Ante Price Offers in Matching Games Non-steady States," Econometrica, Econometric Society, vol. 59(5), pages 1425-1454, September.
    23. James D. Montgomery, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(1), pages 163-179.
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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, WZB Berlin Social Science Center.
    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. Giorgio Fagiolo & Giovanni Dosi & Roberto Gabriele, 2005. "Towards an evolutionary interpretation of aggregate labor market regularities," Springer Books, in: Uwe Cantner & Elias Dinopoulos & Robert F. Lanzillotti (ed.), Entrepreneurships, the New Economy and Public Policy, pages 223-252, Springer.
    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. Sylvain Barde, 2007. "Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions," Studies in Economics 0702, School of Economics, University of Kent.
    8. repec:spo:wpecon:info:hdl:2441/8001 is not listed on IDEAS
    9. Matteo Richiardi, 2006. "Toward a Non-Equilibrium Unemployment Theory," Computational Economics, Springer;Society for Computational Economics, vol. 27(1), pages 135-160, February.
    10. Aviad Tur-Sinai, 2020. "The effect of terror and economic sector in early career years on future career path," Empirical Economics, Springer, vol. 59(5), pages 2153-2184, November.
    11. repec:spo:wpmain:info:hdl:2441/8001 is not listed on IDEAS
    12. repec:hal:spmain:info:hdl:2441/8001 is not listed on IDEAS
    13. Neugart, Michael, 2008. "Labor market policy evaluation with ACE," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 418-430, August.
    14. 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.
    15. Fransen, Koos & Boussauw, Kobe & Deruyter, Greta & De Maeyer, Philippe, 2019. "The relationship between transport disadvantage and employability: Predicting long-term unemployment based on job seekers’ access to suitable job openings in Flanders, Belgium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 268-279.
    16. Luiz Pedro Couto Santos Silva & Alexandre Alves Porsse, 2024. "Inequality and spatial mismatch in the urban labor market: Evidence for the Curitiba metropolitan region, Brazil," Environment and Planning B, , vol. 51(7), pages 1632-1649, September.
    17. repec:hal:wpspec:info:hdl:2441/8001 is not listed on IDEAS

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    More about this item

    Keywords

    Matching function; Large population approximation; Optimal search intensity;
    All these keywords.

    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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