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The macro-dynamics of sorting between workers and firms

Author

Listed:
  • Jeremy Lise

    (Institute for Fiscal Studies and University of Minnesota)

  • Jean-Marc Robin

    (Institute for Fiscal Studies and Sciences Po and University College London)

Abstract

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.

Suggested Citation

  • Jeremy Lise & Jean-Marc Robin, 2013. "The macro-dynamics of sorting between workers and firms," IFS Working Papers W13/22, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:13/22
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    File URL: http://www.ifs.org.uk/wps/wp201322.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    On-the-job search; heterogeneity; aggregate fluctuations; mis-match;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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