efficient search on the job and the business cycle the paper develops a model of directed search on the job in which transitions of workers between unemployment and employment and across employers are driven by heterogeneity in the quality of firm worker matches the equilibrium is such that the agents value and policy functions are independent of the endogenous distribution of workers across employment states hence the model can be solved outside of the steady state and used to measure the effect of cyclical productivity shocks on the labor market productivity shocks are found to generate large fluctuations in workers transitions unemployment and vacancies when matches are experience goods but not when matches are inspection goods

a search theoretic model of the retail market for illicit drugs a search theoretic model of the retail market for illegal drugs is developed trade occurs in bilateral potentially long lived matches between sellers and buyers buyers incur search costs when experimenting with a new seller moral hazard is present because buyers learn purity only after a trade is made this model is consistent with some new stylized facts about the drugs market and it is informative for policy design the effectiveness of different enforcement strategies is evaluated including some novel ones that leverage the moral hazard present in the market copyright oxford university press

the distribution of earnings in an equilibrium search model with state dependent offers and counteroffers we construct an equilibrium job search model with on the job search in which firms implement optimal wage strategies under full information in the sense that they leave no rent to their employees and counter the offers received by their employees from competing firms productivity dispersion across firms results in wage mobility both within and across firms workers may accept wage cuts to move to firms offering higher future wage prospects equilibrium productivity dispersion across ex ante homogeneous firms can be endogenously generated productivity dispersion then generates a nontrivial wage distribution which is generically thin tailed as typically observed in the data

wage and technology dispersion this paper explains why firms with identical opportunities may use different technologies and offer different wages our key assumption is that workers must engage in costly search in order to gather information about jobs stigler 1961 in equilibrium some firms adopt high fixed cost high productivity technologies offer high wages and fill job openings quickly other firms adopt less capital intensive technologies and offer low wages hiring mostly uninformed workers in equilibrium the amount of wage dispersion leaves workers indifferent about whether to gather information and the fraction of informed workers leaves firms indifferent about their wage and technology choice we show that worker search which would appear to be a rent seeking activity in partial equilibrium may be efficiency enhancing in general equilibrium

termination of dynamic contracts in an equilibrium labor market model i construct an equilibrium model of the labor market where workers and firms enter into dynamic contracts that can potentially last forever but are subject to optimal terminations upon a termination the firm hires a new worker and the worker who is terminated receives a termination contract from the firm and is then free to go back to the labor market to seek new employment opportunities and enter into new dynamic contracts the model permits only two types of equilibrium terminations that resemble respectively the two kinds of labor market separations that are typically observed in practice involuntary layos and voluntary retirements the model allows simultaneous determination of its equilibrium turnover unemployment and retirement as well as the expected utility of the new labor market entrants

nonstationary relational contracts with adverse selection i develop a model of nonstationary relational contracts in order to study internal wage dynamics workers are heterogeneous and each worker s ability is both private information and fixed for all time learning therefore occurs within employment relationships the inferences however are confounded by moral hazard incentive provision is restricted by an inability to commit to long term contracts relational contracts which must be self enforcing must therefore be used the wage dynamics in the optimal contract which are pinned down by the tension between incentive provision and contractual enforcement are intimately related to the learning effect

estimating a market equilibrium search model from panel data on individuals from albrecht and axell 1984 and is based on workers who are homogeneous in terms of market productivity and heterogeneous in terms of nonmarket productivity and on firms which are heterogeneous in terms of productive efficiency the equilibrium model is contrasted in terms of its fit to the data with an unrestricted version of the model which is based on a mixture of negative binomial distributions the equilibrium model fails to conform to the data in exactly the dimension of its major focus namely it implies that measurement error accounts for almost all of the dispersion in observed wages the equilibrium model also does not do well in fitting the unemployment duration distribution compared to the unrestricted model the problem is that the duration distribution itself does not support the existence of significant heterogeneity as evidenced by the estimates of the unrestricted model the paper also illustrates the use of such models for policy analysis by simulating the welfare effects of a minimum wage

dynamic contracts with worker mobility via directed on the job search this article proposes a model with dynamic incentive contracts and on the job search in a frictional labor market the optimal long term contract exhibits an increasing wage tenure profile with increasing wages worker effort also increases with tenure these two features imply that the probabilities of both voluntary and involuntary job separation decrease with both job tenure and the duration of employment given these results workers experience differing labor market transitions between employment unemployment and across different employers and the equilibrium generates endogenous heterogeneity among ex ante homogeneous workers abstract from author

search theoretic models of the labor market a survey we survey the literature on search theoretic models of the labor market we show how this approach addresses many issues including the following why do workers sometimes choose to remain unemployed what determines the lengths of employment and unemployment spells how can there simultaneously exist unemployed workers and unfilled vacancies what determines aggregate unemployment and vacancies how can homogeneous workers earn different wages what are the tradeoffs firms face from different wages how do wages and turnover interact what determines efficient turnover we discuss various modeling choices concerning wage determination and the meeting process including recent models of directed search

an empirical equilibrium job search model with search on the job and heterogeneous workers and firms in this article we present and estimate a synthesis of previous equilibrium search models allowing for continuous distributions of workers opportunity costs of employment as well as firms productivities the model allows for on the job search and we assume that job offer arrival rates for workers are independent of their labor market state we derive the theoretical implications of these assumptions we provide simulations and we develop a semiparametric estimation procedure that we apply to a dataset of individual labor market histories

search theory the 2010 nobel memorial prize in economic sciences this paper surveys search theory with an emphasis on the contributions of the 2010 laureates for the nobel memorial prize in economic sciences peter diamond dale mortensen and christopher pissarides

learning by doing vs learning about match quality can we tell them apart understanding the accumulation of match specific capital is crucial in shedding light on the reasons for the prevalence of long term employ ment relationships and on the welfare consequences of turnover in the labor market one of the most important source of match specific capital is human capital acquired through match specific learning such learn ing can take on two distinct forms in the first case workers accumulate match specific human capital through learning by doing in the second case a worker and a firm in an employment relationship learn about the quality of the match over time thereby acquiring valuable information i construct a structural model that embeds these two learning explana tions i show that it is possible to distinguish the two explanations given turnover data on employing firms coupled with data on workers such data now exist in the form of matched employer employee data sets i use a matched french data set to estimate the structural model using the efficient method of moments a simulation based estimation method i find that while learning by doing could be present in the first few months of an employment relationship learning about match quality dominates at tenures above half a year this finding has important consequences for economists understanding of the sources of match specific capital and for the desirability of policies that alter the incentives for turnover for workers of different tenure

asymmetric information and search frictions a neutrality result this paper integrates asymmetric information between firms into a canonical model of on the job search workers are heterogeneous in ability but not all employers observe a worker s type wage dispersion caused by search frictions makes the equilibrium wage distribution insensitive to informational asymmetries hence the equilibrium outcome may be the same as when a worker s ability is known to every firm the supportability of the full information outcome depends on market parameters related to productivity knowledge and search the theoretical results elucidate an empirical puzzle about demographic differences in asymmetric information between employers

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

empirical inference with equilibrium search models of the labour market this paper examines the use of equilibrium search models in the empirical analysis of labour markets we survey the literature on structural estimation of these models with micro data on wages and durations and we discuss the advantages of this approach for policy analysis and for obtaining a better understanding of the labour market during the past ten years substantial progress has been made in terms of the explanatory power of these models we finish with a critical examination of the extent to which the approach can be fruitfully applied to matched worker firm data

on the job search and moral hazard we analyze the interaction between intertemporal incentive contracts and search frictions associated with on the job search in our model agency problems call for wage contracts with deferred compensation at the same time workers do on the job search deferred compensation improves workers incentives to exert effort but distorts their on the job search decisions we show that deferred compensation is less attractive when the value to the worker firm pair of on the job search is high moreover the interplay between search frictions and wage contracts creates feedback effects if firms in equilibrium use contracts with deferred compensation fewer firms with vacancies enter the on the job search market and this in turn reduces the distortions created by deferred compensation these feedback effects between the incentive contracts used and the activity level in the search markets can lead to multiple equilibria a low turnover equilibrium where firms use deferred compensation and a high turnover equilibrium where they do not furthermore the model predicts that firms are more likely to use deferred compensation when search frictions are high and when the gains from on the job search are small

public sector wage policy and labor market equilibrium a structural model we develop and estimate a structural model that incorporates a sizable public sector in a labor market with search frictions the wage distribution and the employment rate in the public sector are taken as exogenous policy parameters overall wage distribution and employment rate are determined within the model taking into account the private sector s endogenous response to public sector employment policies job turnover is sector specific and transitions between sectors depend on the worker s decision to accept alternative employment in the same or different sector by comparing the value of employment in the current and prospective jobs the model is estimated on british data by a method of moments we use the model to simulate the impact of various counterfactual public sector wage and employment policies

directed search for equilibrium wage tenure contracts i analyze the equilibrium in a labor market where firms offer wage tenure contracts to direct the search of employed and unemployed workers each applicant observes all offers and there is no coordination among individuals workers applications as well as firms recruiting decisions are optimal this optimality requires the equilibrium to be formulated differently from the that in the literature of undirected search i provide such a formulation and show that the equilibrium exists in the equilibrium individuals explicitly tradeoff between an offer and the matching rate at that offer this tradeoff yields a unique offer which is optimal for each worker to apply and applicants are separated endogenously according to their current values despite such uniqueness and separation there is a non degenerate and continuous wage distribution of employed workers in the stationary equilibrium the density of this distribution is increasing at low wages and decreasing at high wages in all equilibrium contracts wages increase with tenure which results in quit rates to decrease with tenure moreover the model makes novel predictions about individuals job to job transition and comparative statics

equilibrium search with continuous productivity dispersion theory and nonparametric estimation in this article we develop an equilibrium search model with a continuous distribution of firm productivity types within a given labor market we characterize equilibrium derive expressions for the endogenous equilibrium wage distributions and characterize the set of wage distributions that can be generated by the model we develop a structural nonparametric estimation method for the productivity distribution we estimate the model using french longitudinal survey data on labor supply and we compare the results with those from a french panel data set of firms the results are informative on the degree to which firms exploit search frictions

frictional wage dispersion in search models a quantitative assessment we propose a new measure of frictional wage dispersion the mean min wage ratio for a large class of search models we show that this measure is independent of the wage offer distribution but depends on statistics of labor market turnover and on preferences under plausible preference parameterizations observed magnitudes for worker flows imply that in the basic search model and in most of its extensions frictional wage dispersion is very small notable exceptions are some of the most recent models of on the job search our new measure allows us to rationalize the diverse empirical findings in the large literature estimating structural search models

wage growth due to human capital accumulation and job search a comparison between the united states and germany this paper compares the sources of wage growth of young male workers in two countries with very different labor market institutions the united states and germany the author first develops a simple method for decomposing wage growth into components due to general human capital accumulation firm specific human capital accumulation and job search the empirical analysis uses data from administrative records germany and the national longitudinal survey of youth united states for cohorts entering the labor market in the late 1970s and early 1980s although the two countries differed substantially in mobility rates they were similar in the sources of wage growth with general human capital accumulation being the most important single source and job search accounting for an additional 25 or more of total wage growth there is no evidence that returns to firm specific human capital accumulation were higher for german apprentices than for u s high school dropouts or graduates

job matching and the wage distribution this paper brings together the microeconomic labor and the macroeconomic equilibrium views of matching in labor markets we nest a job matching model a la jovanovic 1984 into a mortensen and pissarides 1994 type equilibrium search environment the resulting framework preserves the implications of job matching theory for worker turnover and wage dynamics and it also allows for aggregation and general equilibrium analysis we obtain two new equilibrium implications of job matching and search frictions for wage inequality first learning about match quality and worker turnover map gaussian output noise into an ergodic wage distribution of empirically accurate shape unimodal skewed with a paretian right tail second high idiosyncratic productivity risk hinders learning and sorting and reduces wage inequality the equilibrium solutions for the wage distribution and for the aggregate worker flows quits to unemployment and to other jobs displacements hires provide the likelihood function of the model in closed form

search unemployment and age abstract we examine a search and matching model of the labor market with overlapping generations of workers in this model we focus on the effects of the finite lifetime of workers as a result of finite lifetime very old workers with the same productivity as younger workers generally earn less a market solution with nash bargained wages is never optimal as old workers search too long compared to the efficient solution we also examine the effects of policy measures such as hiring subsidies or unemployment insurance on employment labor market institutions have a differential impact for different age groups

tenure experience human capital and wages a tractable equilibrium search model of wage dynamics we develop and estimate an equilibrium job search model of worker careers allowing for human capital accumulation employer heterogeneity and individual level shocks wage growth is decomposed into contributions of human capital and job search within and between jobs human capital accumulation is largest for highly educated workers the contribution from job search to wage growth both within and between job declines over the fi rst ten years of a career the job shopping phase of a working life after which workers settle into high quality jobs using outside o ffers to generate gradual wage increases thus reaping the bene fits from competition between employers

equilibrium price distributions equilibrium price distributions for a homogeneous product consistent with individual incentives are investigated they arise in informationally imperfect markets in which the only primitive datum is the distribution of search costs it is shown that single multi and continuous price distributions are all viable long run phenomena depending on the nature of search costs a method for computing equilibrium price distributions is also provided jevons law of one price has long been an accepted dictum in economic theory in a classroom presentation it still serves sometimes implicitly as a major premise in many micro models of market interaction much of the descriptive theory as well as welfare analysis hinges on this assumption yet one s day to day experience reveals that price differentials are a viable phenomenon and that looking for lower prices may very well be a rewarding activity the prospects of eventually hitting a bargain and the resulting price reduction would more than compensate for the cost incurred during the search process moreover the existence of price dispersions appear to be an empirically stable phenomenon snapshots of markets for relatively homogeneous products reveal substantial and recurring price differentials stigler 1961 and pratt wise and zeckhauser 1979 for example report some evidence supporting this claim an important article by stigler 1961 focused economists attention on the crucial role played by the informational structure of markets it gave rise to the study of the

intertemporal labour supply with search frictions starting in the 1970 s wage inequality and the number of hours worked by employed u s prime age male workers have both increased we argue that these two facts are related we use a labour market model with on the job search where by working longer hours individuals acquire greater skills since job candidates are ranked by productivity greater skills not only increase worker s productivity in the current job but also help the worker to obtain better jobs when job offers become more dispersed wage inequality increases and workers work longer hours to obtain better jobs as a result average hours per worker in the economy increase this mechanism accounts for around two thirds of the increase in hours observed in data part of the increase is inefficient since workers obtain better jobs at the expense of other workers competing for the same jobs copyright oxford university press

learning your comparative advantages we introduce an equilibrium labor market model where workers gradually learn about their unobserved production abilities while engaged in a productive activity occupation workers observe their output and extract information that allows them to make inferences about their unobserved aptitudes because workers are learning about themselves their output informs them not only about their productivity in their current occupation but about their likely productivity in other occupations as well as workers acquire more information they self select into the occupations in which they expect to perform best and their wages increase returns to experience here capture improved job selection by workers as they sort through occupations and learn

experience vs obsolescence a vintage human capital model abstract i introduce endogenous human capital accumulation into an infinite horizon version of chari and hopenhayn s 1991 4 vintage human capital model returns to skill and tenure premia are highest in young vintages where skill is scarcest and agents accumulate human capital fastest as the vintage ages the skill premium decreases and vanishes entirely upon vintage death workers run through cycles of human capital accumulation their wages rise as they accumulate skill undergo downward pressure as the technology ages and finally drop sharply when the worker switches to a new technology the results are in line with german linked employer employee data tenure premia are highest in young establishments as well as in fast growing industries occupations and establishments a calibration exercise suggests that human capital accumulation is the most important determinant of workers wage profiles whereas changes to the price of skill and vintage productivity gains play a smaller quantitative role

financial markets and wages we study a labor market equilibrium model in which flrms sign optimal long term contracts with workers firms that are flnancially constrained ofier an increasing wage proflle they pay lower wages today in exchange of higher wages once they become unconstrained and operate at a larger scale in equilibrium constrained flrms are on average smaller and pay lower wages in this way the model generates a positive relation between flrm size and wages using data from the national longitudinal survey of youth nlsy we show that the key dynamic properties of the model are supported by the data jel classiflcation g31 j31 e24

the career dynamics of high skilled women and men evidence from sweden in this paper we use matched worker firm register data from sweden to examine the career dynamics of high skill women and men specifically we track wages for up to 20 years among women and men b

optimal self enforcement and termination abstract we study a principal agent problem where the agent receives a stochastic outside opportunity offer each period and he cannot commit to the ongoing contractual relationship termination which is costly allows the principal to go back to an external market to hire a new agent the principal responds strategically to the agent s outside offers choosing optimally between retaining the agent which must be self enforced and terminating him which then ends the current contract the model generates both voluntary and involuntary terminations and dynamics and stationarity outcomes that are of interest especially for understanding employment relationships with on the job search

an equilibrium search model when firms observe workers employment status this article considers an equilibrium search model where firms post wages using information on workers employment status earnings differentials between workers of different employment statuses are driven by firms ability to discriminate workers reservation wages i study how these wage policies depend on firms and workers characteristics and how these policies affect the wage distribution the model delivers new predictions for the amount of wage dispersion that can be generated with search models and provides a better representation of the left tail of the wage distribution in the presence of a legal minimum wage than standard equilibrium search models

does high income promote democracy the authors construct a statistical model with which to test whether the regularity that democracy is more commonly found among wealthy countries stems from a democratizing effect of high income or is due entirely to other factors such as the historical context various features of the institutional setting and simultaneity with the process of leadership change even after correcting for these many other influences the democratizing effect of income remains as a statistically significant factor promoting the emergence of democratic political institutions the authors go on to find that leaders risks of losing power rise during their time in office and that these risks are higher in more democratic countries the authors confirm the finding by burkhart and lewis beck that the democracy promoting effect of income is stronger among the european countries they suggest that high income has a more powerful democratizing effect among the southern european countries because it interacts with pressure from major trading partners to democratize this suggests a revaluation of policies designed to foster the replacement of authoritarian regimes by democratic ones through free trade

directed search on the job and the wage ladder we model a labor market where employed workers search on the job and firms direct workers search using wage offers and employment probabilities applicants observe all offers and face a trade off between wage and employment probability there is wage dispersion among workers even though all workers and jobs are homogeneous equilibrium wages form a ladder as workers optimally choose to climb the ladder one rung at a time this is because low wage applicants are relatively more sensitive to employment probability than to wage and thus forgo the opportunity to apply for a high wage with a lower chance of success

wage tenure contracts in a frictional labour market firms strategies for recruitment and retention a common assumption in equilibrium search and matching models of the labour market is that each firm posts a wage to be paid to any worker hired this paper considers the implications of firms posting contracts in a random matching model with on the job search more complex contracts enable firms to address both recruitment and retention problems by for example increasing the wage with tenure the effect on the labour market is to reduce turnover below the level required for efficient matching of workers to firms copyright 2004 wiley blackwell

equilibrium matching and termination in an equilibrium model of the labor market with moral hazard jobs are dynamic contracts job separations are terminations of optimal dynamic contracts transitions from unemployment to new jobs are modeled as a process of random matching and nash bargaining non employed workers make consumption and saving decisions as in a standard growth model as well as whether or not to participate in the labor market the stationary equilibrium is characterized the model is then calibrated to the u s labor market to study quantitatively the worker flows and distributions the compensation dynamics and the effects of ui system

a model of job and worker flows we develop a model of gross job and worker flows and use it to study how the wages permanent incomes and employment status of individual workers evolve over time and how they are affected by aggregate labor market conditions our model helps explain various other features of labor markets such as the size and persistence of the changes in income that workers experience due to displacements or job to job transitions the length of job tenures and unemployment duration and the amount of worker turnover in excess of job reallocation we also examine the effects that labor market institutions and public policy have on the gross flows as well as on the resulting wage distribution employment and aggregate output in the equilibrium from a theoretical point of view we study the extent to which the competitive equilibrium achieves an efficient allocation of resources

reprint of the career dynamics of high skilled women and men evidence from sweden abstract in this paper we use matched worker firm register data from sweden to examine the career dynamics of high skill women and men specifically we track wages for up to 20 years among women and men born in the years 1960 70 who completed a university degree in business or economics these women and men have similar wages and earnings at the start of their careers but their career paths diverge substantially as they age these men and women also have substantial differences in wage paths associated with becoming a parent we look at whether firm effects account for the differences we observe between women s and men s wage profiles we document differences between the firms where men work and those where women work however a wage decomposition suggests that these differences in firm characteristics play only a small role in explaining the gender log wage gap among these workers we then examine whether gender differences in firm to firm mobility help explain the patterns in wages that we see men and women both exhibit greater mobility early in their careers but there is little gender difference in this firm to firm mobility we find that the main driver of the gender difference in log wage profiles is that men experience higher wage gains than women do both as switchers and as stayers

the cost of job loss this article identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on the job search where risk averse workers accumulate human capital through learning by doing and lose skills while unemployed optimal contracting implies the wage paid increases with experience and tenure indirect inference using german data determines the deep parameters of the model the estimated model not only reproduces the large and persistent fall in wages and earnings following job loss a new structural decomposition finds foregone human capital accumulation while unemployed is the worker s major cost of job loss

human capital accumulation and labor market equilibrium the objective of this paper is to analyse an equilibrium search model with on the job search and human capital accumulation in our model wages are disperse because firms pay workers of the same productivity different wages and workers of different productivies earn different wages new entrants to the labour market increase their wages mainly through on the job search as workers gain more experience and move up the offer distribution job to job transitions become less frequent and human capital accumulation dominates wage growth this interaction generates a wage distribution that exhibits a density with a unique mode and a long and decreasing right tail as observed in the data

wage tenure contracts with heterogeneous firms abstract this paper investigates equilibria where firms post wage tenure contracts and risk averse workers search for new job opportunities whether employed or unemployed we generalize previous work by assuming firms have different productivities equilibrium implies more productive firms always offer more desirable contracts thus workers never quit from more productive firms for less productive firms nevertheless turnover is inefficient as employees with long tenures at low productivity firms may reject outside job offers from more productive firms a worker who quits to a more productive firm may accept a wage cut such wage cuts are compensated by faster promotion rates to higher wage levels in the future we also generalize previous arguments by showing equilibria exist where the distribution of offers contains interior mass points and find equilibrium wage tenure contracts need not be smooth

outside opportunities and termination abstract we study a dynamic principal agent relationship where a stochastic outside opportunity offer arises each period for the risk averse agent termination is costly but it allows the agent to pursue the available outside opportunity and the principal to return to an external market to hire a new agent the principal acts strategically with respect to the agent s outside offers and we show that it is optimal to terminate the current relationship if and only if the agent s outside offer is above a cutoff level the optimal contract generates both voluntary and involuntary terminations severance compensation arises endogenously and we show that it may be paid only in involuntary terminations conditional on termination the size of the optimal severance compensation depends positively on the agent s current compensation but negatively on his outside offer the optimal contract dictates an inverted u relationship between compensation and the probability of termination

on the job search and strategic bargaining abstract this paper studies wage bargaining in a simple economy in which both employed and unemployed workers search for better jobs the axiomatic nash bargaining solution and standard strategic bargaining solutions are inapplicable because the set of feasible payoffs is nonconvex i instead develop a strategic model of wage bargaining between a single worker and firm that is applicable to such an environment i show that if workers and firms are homogeneous there are market equilibria with a continuous wage distribution in which identical firms bargain to different wages each of which is a subgame perfect equilibrium of the bargaining game if firms are heterogeneous i characterize market equilibria in which more productive firms pay higher wages i compare the quantitative predictions of this model with burdett and mortensen s 1998 wage differentials employer size and unemployment international economic review 39 257 273 wage posting model and argue that the bargaining model is theoretically more appealing along important dimensions

the empirical content of the job search model labor mobility and wage distributions in europe and the us abstract job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand and the determinants of wage dispersion on the other this paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a three year panel of individual worker data covering 10 european countries and the u s we find that our basic job search model fits the data surprisingly well this also allows us to point at a number of interesting empirical regularities about wage distributions our results suggest that cross sectional data on individual wages contain the basic information needed to obtain a reliable measure of the magnitude of labor market frictions as measured by a parameter of the canonical job search model finally we use our results in a cross country comparison of the intensity and nature of job to job turnover we arrange countries into two different groups according to their turnover intensity we further show that the nature of job to job turnover is very different between those two groups turnover is predominantly voluntary in low turnover countries whereas it is to a large extent involuntary in high turnover countries

occupational specificity of human capital we find that returns to occupational tenure are substantial everything else being constant 5 years of occupational tenure are associated with an increase in wages of 12 20 moreover when occupational experience is taken into account tenure with an industry or employer has relatively little importance in accounting for the wage one receives this finding is consistent with human capital being occupation specific

directed search on the job heterogeneity and aggregate fluctuations we study a labor market where workers search for jobs both on the job and off the job in the model there are aggregate productivity shocks and match specific shocks we outline the proof of existence of an equilibrium which we call a block recursive equilibrium bre in which individuals decisions and market tightness are independent of the distribution of workers over wages or contracts a critical assumption that is responsible for a bre to exist is that search is directed by firms posting of contracts we explain why a bre does exist under the assumption of directed search and why it does not under the assumption of random search finally we generalize the proof of existence of a bre to allow workers to be ex ante heterogeneous with respect to some observable characteristics such as education and skill this abstract was borrowed from another version of this item

an empirical equilibrium search model of the labor market in structural empirical models of labor market search the distribution of wage offers is usually assumed to be exogenous however because in setting their wages profit maximizing firms should consider the reservation wages of job seekers the wage offer distribution is essentially endogenous we investigate whether a proposed equilibrium search model in which the wage offer distribution is endogenous is able to describe observed labor market histories we find that the distributions of job and unemployment spells are consistent with the data and that the qualitative predictions of the model for the wages set by employers are confirmed by wage regressions the model is estimated using panel data on unemployed and employed individuals we distinguish between separate segments of the labor market and we show that productivity heterogeneity is important to obtain an acceptable fit to the data the results are used to estimate the degree of monopsony power of firms further the effects of changes in the mandatory minimum wage are examined

equilibrium wage tenure contracts in this study we consider a labor market matching model where firms post wage tenure contracts and workers both employed and unemployed search for new job opportunities given workers are risk averse we establish there is a unique equilibrium in the environment considered although firms in the market make different offers in equilibrium all post a wage tenure contract that implies a worker s wage increases smoothly with tenure at the firm as firms make different offers there is job turnover as employed workers move jobs as the opportunity arises this implies the increase in a worker s wage can be due to job to job movements as well as wage tenure effects further there is a nondegenerate equilibrium distribution of initial wage offers that is differentiable on its support except for a mass point at the lowest initial wage we also show that relevant characteristics of the equilibrium can be written as explicit functions of preferences and the other market parameters

labor market equilibrium with rehiring consistent with the empirical evidence this article analyzes a labor market in which separations are not permanent and reactivated firms prefer to rehire former employees instead of seek new ones workers engage in job search due to the uncertain prospects of rehiring if firms can commit to wages contingent on rehiring they backload wages to provide incentives for workers to reduce their unobservable search effort under risk aversion and incomplete markets if productivity at reactivation is sufficiently high the tension between wage backloading and consumption smoothing leads to excessive search in equilibrium

the pervasive absence of compensating differentials we study the relation between individual preferences for job amenities e g type of work job security and compensating wage differentials in cross section to this end we estimate a partial equilibrium job search model on panel data from eight european countries there are five non wage job characteristics and two sources of job to job mobility on the job search and reallocation shocks we also allow for two types of unobserved heterogeneity we find strong preferences for amenities especially job security yet these preferences do not translate into significant wage differentials in cross section counterfactual experiments show that one would need extremely low levels of search frictions for compensating differentials to arise lastly a similar exercise on the distribution of job change outcomes reveals the role of constrained job to job mobility in the absence of compensating wage differentials copyright 2009 john wiley sons ltd

wage differentials employer size and unemployment the unique equilibrium solution to a game in which a continuum of individual employers choose permanent wage offers and a continuum of workers search by sequentially sampling from the set of offers is characterized wage dispersion is a robust outcome provided that workers search while employed as well as when unemployed the unique nondegenerate equilibrium distribution of wage offers is constructed for three cases 1 identical workers and employers 2 identical employers and an atomless distribution of worker supply prices and 3 identical workers and an atomless distribution of job productivities copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

it s about time implications of the period length in an equilibrium search model empirical evidence suggests that transitions between employment states are highly clustered around the first day of each workweek or month i analyze the effect of this phenomenon by presenting an equilibrium search model in which the period length is a parameter determining the degree of clustering infinitesimally short periods result in a continuous time model with bilateral meetings whereas longer time periods introduce the possibility of recall or simultaneity of job offers in this environment i show that the period length has a profound effect on equilibrium outcomes including the unemployment rate unemployment duration and the cross sectional wage distribution

on the job search productivity shocks and the individual earnings process individual labor earnings observed in worker panel data have complex highly persistent dynamics we investigate the capacity of a structural job search model with i i d productivity shocks to replicate salient properties of these dynamics such as the covariance structure of earnings the evolution of individual earnings mean and variance with the duration of uninterrupted employment or the distribution of year to year earnings changes specifically we show within an otherwise standard job search model how the combined assumptions of on the job search and wage renegotiation by mutual consent act as a quantitatively plausible internal propagation mechanism of i i d productivity shocks into persistent wage shocks the model suggests that wage dynamics should be thought of as the outcome of a specific acceptance rejection scheme of i i d productivity shocks this offers an alternative to the conventional linear arma type approach to modelling earnings dynamics structural estimation of our model on a 12 year panel of highly educated british workers shows that our simple framework produces a dynamic earnings structure which is remarkably consistent with the data