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On-the-Job Search in a Matching Model with Heterogeneous Jobs and Workers

  • Dolado, Juan J.
  • Jansen, Marcel
  • Jimeno, Juan F

This paper considers a matching model with heterogeneous jobs (unskilled and skilled) and workers (low- and high-educated) which allows for on-the-job search by mismatched workers. The latter are high-educated workers who transitorily accept unskilled jobs and continue to search for skilled jobs. Our findings show that on-the-job search introduces an additional source of between- and within-group wage inequality. Furthermore, the higher quit rate of mismatched workers exerts a negative externality on unskilled jobs and weakens the labour market position of low-educated workers. This last feature changes the effects of skill-biased technological change and it alters the response of the labour market to shifts in the skill distribution.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4094.

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Date of creation: Oct 2003
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Handle: RePEc:cpr:ceprdp:4094
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