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The Macro-dynamics of Sorting between Workers and Firms

  • Jeremy Lise


    (University College London)

  • Jean-Marc Robin


    (Sciences-Po, Paris and University College London)

We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterizes the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labor market data from 1951-2007 and predict the fit for 2008-12. We use the model to measure the cyclicality of mismatch between workers and jobs.

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File Function: First version, August, 2013
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Paper provided by Human Capital and Economic Opportunity Working Group in its series Working Papers with number 2013-012.

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Date of creation: Sep 2013
Date of revision:
Handle: RePEc:hka:wpaper:2013-012
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  1. Shouyong Shi & Guido Menzio, 2009. "Block Recursive Equilibria for Stochastic Models of Search on the Job," 2009 Meeting Papers 177, Society for Economic Dynamics.
  2. Jean-Marc Robin, 2010. "On the dynamics of unemployment and wage distributions," CeMMAP working papers CWP04/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  4. Guido Menzio & Shouyong Shi, 2008. "Efficient Search on the Job and the Business Cycle, Second Version," PIER Working Paper Archive 09-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Feb 2009.
  5. Fabien Postel-Vinay & Giuseppe Moscarini, 2013. "Stochastic Search Equilibrium," 2013 Meeting Papers 159, Society for Economic Dynamics.
  6. Guido Menzio & Shouyong Shi, 2009. "Efficient Search on the Job and the Business Cycle," NBER Working Papers 14905, National Bureau of Economic Research, Inc.
  7. Marcus Hagedorn & Iourii Manovskii, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," 2005 Meeting Papers 460, Society for Economic Dynamics.
  8. repec:inr:wpaper:155908 is not listed on IDEAS
  9. Moscarini, Giuseppe & Thomsson, Kaj, 2006. "Occupational and Job Mobility in the US," Working Papers 19, Yale University, Department of Economics.
  10. Guido Menzio & Shouyong Shi, 2010. "Directed Search on the Job, Heterogeneity, and Aggregate Fluctuations," Working Papers tecipa-390, University of Toronto, Department of Economics.
  11. Dale Mortensen & Melvyn Coles, 2014. "Equilibrium Labor Turnover, Firm Growth and Unemployment," 2014 Meeting Papers 462, Society for Economic Dynamics.
  12. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00357751, HAL.
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