Mismatch, Sorting and Wage Dynamics

Jeremy Lise, Costas Meghir and Jean-Marc Robin

No 18719, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which 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 productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. Here optimal policy is defined as that which maximizes total output and home production, accounting for the various constraints that arise from search frictions. The model is estimated on the NLSY using the method of moments.

JEL-codes: C15 C63 D04 J08 J3 J63 J64 J65 (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-dge, nep-lab, nep-lma and nep-ltv
Note: LS PE
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Citations: View citations in EconPapers (25)

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Related works:
Working Paper: Mismatch, Sorting and Wage Dynamics (2013)
Working Paper: Mismatch, Sorting and Wages Dynamics (2013)
Working Paper: Mismatch, Sorting and Wages Dynamics (2013)
Working Paper: Mismatch, sorting and wage dynamics (2013)
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