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Jacks of All Trades and Masters of One: Declining Search Frictions and Unequal Growth

Author

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  • Paolo Martellini
  • Guido Menzio

Abstract

Declining search frictions generate productivity growth by allowing workers to find jobs for which they are better suited. The return of declining search frictions on productivity varies across different types of workers. For workers who are "jacks of all trades" in the sense that their productivity is nearly independent from the distance between their skills and the requirements of their job—declining search frictions lead to minimal productivity growth. For workers who are "masters of one trade" in the sense that their productivity is very sensitive to the gap between their individual skills and the requirements of their job—declining search frictions lead to fast productivity growth. As predicted by this view, we find that workers in routine occupations have low wage dispersion and growth, while workers in non-routine occupations have high wage dispersion and growth.

Suggested Citation

  • Paolo Martellini & Guido Menzio, 2020. "Jacks of All Trades and Masters of One: Declining Search Frictions and Unequal Growth," Staff Report 613, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:88800
    DOI: 10.21034/sr.613
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    References listed on IDEAS

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    1. Paolo Martellini & Guido Menzio, 2020. "Declining Search Frictions, Unemployment, and Growth," Journal of Political Economy, University of Chicago Press, vol. 128(12), pages 4387-4437.
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    Cited by:

    1. Griffy, Benjamin & Rabinovich, Stanislav, 2023. "Worker selectivity and fiscal externalities from unemployment insurance," European Economic Review, Elsevier, vol. 156(C).
    2. Guido Menzio, 2023. "Optimal Product Design: Implications for Competition and Growth Under Declining Search Frictions," Econometrica, Econometric Society, vol. 91(2), pages 605-639, March.
    3. Freund, L. B., 2022. "Superstar Teams: The Micro Origins and Macro Implications of Coworker Complementarities," Cambridge Working Papers in Economics 2276, Faculty of Economics, University of Cambridge.
    4. Nezih Guner & Alessandro Ruggieri, 2021. "Misallocation and inequality," Discussion Papers 2021/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

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    More about this item

    Keywords

    Search frictions; Biased technical change; Growth; Inequality;
    All these keywords.

    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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; 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
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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