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

  • Dolado, Juan J.

    ()

    (European University Institute)

  • Jansen, Marcel

    ()

    (Universidad Autónoma de Madrid)

  • Jimeno, Juan F.

    ()

    (Bank of Spain)

This paper considers a matching model with heterogenous 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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 886.

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Length: 44 pages
Date of creation: Oct 2003
Date of revision:
Publication status: published in: Economic Journal, 2009, 119 (534), 200-228
Handle: RePEc:iza:izadps:dp886
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