Worker heterogeneity and endogenous separations in a matching model of unemployment fluctuations

Mark Bils; Yongsung Chang; Sun Bin Kim

doi:10.1257/mac.3.1.128

Worker heterogeneity and endogenous separations in a matching model of unemployment fluctuations

Mark Bils, Yongsung Chang, Sun Bin Kim

Department of Economics

Research output: Contribution to journal › Article › peer-review

25 Citations (Scopus)

Abstract

We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off- it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.

Original language	English
Pages (from-to)	128-154
Number of pages	27
Journal	American Economic Journal: Macroeconomics
Volume	3
Issue number	1
DOIs	https://doi.org/10.1257/mac.3.1.128
Publication status	Published - 2011 Jan

All Science Journal Classification (ASJC) codes

Economics, Econometrics and Finance(all)

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This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1257/mac.3.1.128

Cite this

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Worker heterogeneity and endogenous separations in a matching model of unemployment fluctuations

Abstract

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