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Technology Dispersion and Labor Market Fluctuations

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  • John Kennes

Abstract

This paper develops a dynamic general equilibrium matching model with many types of long-lived workers, many types of jobs and stochastic transitions between many possible aggregate productivity states. The supply of new jobs is determined by free entry, matching is directed, wages are determined by auction and workers can continue to search on-the-job for better employment opportunities. We show that the model can be solved explicitly and without iteration. Consequently, the numerical calculation of the decentralized equilibrium is both accurate and fast. The model is used to uncover the technological choice set of firms using data on labor market outcomes.

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  • John Kennes, 2008. "Technology Dispersion and Labor Market Fluctuations," 2008 Meeting Papers 1061, Society for Economic Dynamics.
    • Handle: RePEc:red:sed008:1061
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    1. Browning, Martin & Hansen, Lars Peter & Heckman, James J., 1999. "Micro data and general equilibrium models," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 8, pages 543-633, Elsevier.
    2. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
    3. Benoit Julien & John Kennes & Ian King, 2000. "Bidding for Labor," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
    4. Robert Shimer, 2005. "The Assignment of Workers to Jobs in an Economy with Coordination Frictions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 996-1025, October.
    5. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
    6. Lars Ljungqvist & Thomas J. Sargent, 2004. "Recursive Macroeconomic Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026212274x, December.
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