Youth Labor Market Outcomes: A Model with Learning on Match Quality
To investigate why young workers exhibit higher unemployment and separation rates, I extend the basic matching model of Pissarides by incorporating learning on match quality as Pries and Rogerson (2005). Match quality is heterogenous and is inferred from the output performance. Because matches revealed to be bad are dissolved, the separation risk decreases with job tenure. Within the framework, the specificity of youth only comes from their entry position on the labor market. Discrepancies between age-groups arise as young workers are mainly unemployed searching for their first job, or newly employed facing higher unemployment risks. The model, calibrated above French data, performs well in reproducing the intergenerational gap in worker separation and unemployment rates.
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