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We develop an empirical search-matching model with productivity shocks so as to analyze policy interventions in a labour market with heterogeneous agents. To achieve this we develop an equilibrium model of wage determination and employment, which is consistent with key empirical facts. As such our model extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates long-term contracts, on-the-job search and counter-offers, and a vacancy creation and destruction process linked to productivity shocks. Importantly, the model allows for the possibility of assortative matching between workers and jobs, a feature that had been ruled out by assumption in the empirical equilibrium search literature to date.
Authors
Research Fellow Yale University
Costas is a Research Fellow of the IFS and a Professor of Economics at Yale University and a Visiting Professor at University College London.
Research Fellow Sciences Po and University College London
Jean-Marc is a Research Fellow of the IFS and a Professor of Economics at Sciences Po, Paris, and University College London.
Research Associate University of Minnesota
Jeremy is an International Research Associate at the IFS and an Associate Professor of Economics at the University of Minnesota.
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- IFS
Suggested citation
J, Lise and C, Meghir and J, Robin. (2011). Matching, sorting and wages. London: IFS. Available at: https://ifs.org.uk/publications/matching-sorting-and-wages-0 (accessed: 29 March 2024).
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