A competitive theory of mismatch

Javier A. Birchenall

Journal of Economic Dynamics and Control, 2024, vol. 168, issue C

Abstract: I study the distributions of unemployment, vacancies, and wages across local labor markets in an economy where workers and jobs are matched and mismatched based on more explicit assumptions and aggregation principles than in the reduced-form aggregate matching-function approach. The endogenous matching process formulated here is flexible and has practical value for applied work. Local and aggregate labor market adjustments to local productivity and aggregate demand shocks reproduce empirical Beveridge and wage curve patterns, offer an alternative perspective on empirical indices of mismatch unemployment, and deliver an endogenous and commonly used reduced-form aggregate matching function.

Keywords: Unemployment; Vacancies; Mismatch; Continuous-time search (search for similar items in EconPapers)
JEL-codes: D52 E20 E24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:168:y:2024:i:c:s016518892400188x

DOI: 10.1016/j.jedc.2024.104996

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