Worker Flows under Mismatch

I study a dynamic model of matching between heterogeneous workers and heterogeneous jobs. Workers and jobs are attached to different labor markets, and within each labor market, workers and jobs are assigned to different locations, representing heterogeneity in the skills of workers and the skill requirements of jobs. A match between a worker and a job in a given labor market produces flow output that depends on the quality of their match, which is a decreasing function of the distance between them. The worker and the job split this output in a fixed ratio. Matching is frictionless within each labor market. Each period, the set of matches between workers and firms is such that no worker-job pair strictly prefer to be matched with each other than with their current partners. The model is consistent with evidence from the Current Population Survey on the cross-sectional and cyclical behavior of job-to-job transitions. Notably, a worker who recently experienced a job-to-job transition is more likely to undergo another.