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The macro-dynamics of sorting between workers and firms

  • Jeremy Lise

    ()

    (Institute for Fiscal Studies and University College London)

  • Jean-Marc Robin

    ()

    (Institute for Fiscal Studies and Sciences Po)

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 characterises the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labour 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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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W13/22.

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Date of creation: Aug 2013
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Handle: RePEc:ifs:ifsewp:13/22
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  1. Guido Menzio & Shouyong Shi, 2009. "Efficient Search on the Job and the Business Cycle," NBER Working Papers 14905, National Bureau of Economic Research, Inc.
  2. Guido Menzio & Shouyong Shi, 2010. "Directed Search on the Job, Heterogeneity, and Aggregate Fluctuations," Working Papers tecipa-390, University of Toronto, Department of Economics.
  3. Shouyong Shi & Guido Menzio, 2009. "Block Recursive Equilibria for Stochastic Models of Search on the Job," 2009 Meeting Papers 177, Society for Economic Dynamics.
  4. Marcus Hagedorn & Iourii Manovskii, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," 2005 Meeting Papers 460, Society for Economic Dynamics.
  5. Jean‐Marc Robin, 2011. "On the Dynamics of Unemployment and Wage Distributions," Econometrica, Econometric Society, vol. 79(5), pages 1327-1355, 09.
  6. 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.
  7. Postel-Vinay & Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Working Papers 155908, Institut National de la Recherche Agronomique, France.
  8. Giuseppe Moscarini & Fabien Postel-Vinay, 2010. "Stochastic Search Equilibrium," Cowles Foundation Discussion Papers 1754, Cowles Foundation for Research in Economics, Yale University.
  9. repec:ese:iserwp:2012-07 is not listed on IDEAS
  10. Moscarini, Giuseppe & Thomsson, Kaj, 2006. "Occupational and Job Mobility in the US," Working Papers 19, Yale University, Department of Economics.
  11. Melvyn G. Coles & Dale T. Mortensen, 2012. "Equilibrium Labor Turnover, Firm Growth and Unemployment," NBER Working Papers 18022, National Bureau of Economic Research, Inc.
  12. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Sciences Po publications info:hdl:2441/dc0ckec3fcb, Sciences Po.
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