Search, layoffs and reservation wages when job offers follow a stochastic process
Despite the fact that the empirical data indicate the presence of non- stationarity in wage offer distributions, the majority of job-search models are stationary. We model logs of wage offers as a Markov process with i.i.d. increments and solve two typical job-search models for reservation wages, value functions and expected individual duration of unemployment. All solutions are in the closed form and admit interpretation in terms of expected present values of certain streams of payoffs.
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- Lippman, Steven A. & McCall, John J., 1976. "Job search in a dynamic economy," Journal of Economic Theory, Elsevier, vol. 12(3), pages 365-390, June.
- Gerard J. van den Berg, 1990.
"Nonstationarity in Job Search Theory,"
Review of Economic Studies,
Oxford University Press, vol. 57(2), pages 255-277.
- van den Berg, G., 1987. "Nonstationarity in job search theory," Research Memorandum c2b931bf-9cce-4bae-929c-b, Tilburg University, School of Economics and Management.
- Gronau, Reuben, 1971. "Information and Frictional Unemployment," American Economic Review, American Economic Association, vol. 61(3), pages 290-301, June. Full references (including those not matched with items on IDEAS)
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