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Global dynamics in a search and matching model of the labor market

Author

Listed:
  • Nika Lazaryan

    (Federal Reserve Bank of Richmond)

  • Thomas A. Lubik

    (Federal Reserve Bank of Richmond)

Abstract

We study global and local dynamics of a simple search and matching model of the labor market. We show that the model exhibits chaotic and periodic dynamics for empirically plausible parameter values both in backward and forward time. In contrast to the global results, we show that the model can be locally indeterminate or have no equilibrium at all, but only for parameterizations that are empirically unreasonable. In contrast to earlier work, we establish these results analytically without placing numerical restrictions on the parameters.

Suggested Citation

  • Nika Lazaryan & Thomas A. Lubik, 2019. "Global dynamics in a search and matching model of the labor market," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(2), pages 461-497, September.
    • Handle: RePEc:spr:joecth:v:68:y:2019:i:2:d:10.1007_s00199-018-1131-y
    DOI: 10.1007/s00199-018-1131-y
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    References listed on IDEAS

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    Cited by:

    1. Hashimoto, Ken-ichi & Im, Ryonghun & Kunieda, Takuma & Shibata, Akihisa, 2022. "Financial destabilization," Journal of Mathematical Economics, Elsevier, vol. 103(C).
    2. Matthias S. Hertweck & Vivien Lewis & Stefania Villa, 2021. "Going the Extra Mile: Effort by Workers and Job‐Seekers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(8), pages 2099-2127, December.
    3. Tsasa, Jean-Paul K., 2022. "Labor market volatility in a fully specified RBC search model: An analytical investigation," Journal of Mathematical Economics, Elsevier, vol. 103(C).

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    More about this item

    Keywords

    Indeterminacy; Bifurcation; Chaos; Backward map; Forward map;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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