A Discrete-Time Stochastic Model of Job Matching
51 Pages Posted: 26 Nov 2001
Date Written: November 2001
Abstract
In this Paper, an explicit micro scenario is developed which yields a well-defined aggregate job-matching function. In particular, a stochastic model of job-matching behavior is constructed in which the system steady state is shown to be approximated by an exponential-type matching function, as the population becomes large. This steady-state approximation is first derived for fixed levels of both wages and search intensities, where it is shown (without using a free-entry condition) that there exists a unique equilibrium. It is then shown that if job searchers are allowed to choose their search intensities optimally, then this model is again consistent with a unique steady state. Finally, the assumption of a fixed wage is relaxed, and an optimal "offer wage" is derived for employers.
Keywords: Matching function, large population approximation, optimal search intensity
JEL Classification: D83, J41, J61
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Optimal Unemployment Insurance in Search Equilibrium
By Peter Fredriksson and Bertil Holmlund
-
A Theory of the Natural Unemployment Rate and the Duration of Employment
-
Employed and Unemployed Job Search: a Comparison of Choices and Outcomes Among Youth
-
Job Matching, Social Network and Word-of-Mouth Communication
By Antoni Calvo-armengol and Yves Zenou
-
Job Matching, Social Network and Word-of-Mouth Communication
By Antoni Calvo-armengol and Yves Zenou