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A competitive theory of mismatch

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  • Birchenall, Javier A.

Abstract

I study the distributions of unemployment, vacancies, and wages across local labor markets in an economy where workers and jobs are matched and mismatched based on more explicit assumptions and aggregation principles than in the reduced-form aggregate matching-function approach. The endogenous matching process formulated here is flexible and has practical value for applied work. Local and aggregate labor market adjustments to local productivity and aggregate demand shocks reproduce empirical Beveridge and wage curve patterns, offer an alternative perspective on empirical indices of mismatch unemployment, and deliver an endogenous and commonly used reduced-form aggregate matching function.

Suggested Citation

  • Birchenall, Javier A., 2024. "A competitive theory of mismatch," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:dyncon:v:168:y:2024:i:c:s016518892400188x
    DOI: 10.1016/j.jedc.2024.104996
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    More about this item

    Keywords

    Unemployment; Vacancies; Mismatch; Continuous-time search;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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