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We develop an equilibrium model of on-the-job search with ex-ante heterogeneous workers and firms, aggregate uncertainty and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterises the match value and the mobility decision of workers, does not depend on these distributions. We estimate the model on US labour market data from 1951-2007 and predict the fit for 2008-12. We use the model to measure the cyclicality of mismatch between workers and jobs.
Authors
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.
Working Paper details
- DOI
- 10.1920/wp.ifs.2013.1322
- Publisher
- Institute for Fiscal Studies
Suggested citation
Lise, J and Robin, J. (2013). The macro-dynamics of sorting between workers and firms. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/macro-dynamics-sorting-between-workers-and-firms (accessed: 23 April 2024).
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