A Three State Model of Worker Flows in General Equilibrium

Per Krusell (), Toshihiko Mukoyama (), Richard Rogerson () and Aysegul Sahin ()

No 15251, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin. The model is a standard version of the neoclassical growth model with indivisible labor with idiosyncratic shocks and frictions characterized by employment loss and employment opportunity arrival shocks. We argue that it is able to account for the key features of observed labor market flows for reasonable parameter values. Persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories.

JEL-codes: E24 J22 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Date: 2009-08
Note: EFG
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Working Paper: A Three State Model of Worker Flows in General Equilibrium (2009)
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