A three state model of worker flows in general equilibrium

Per Krusell, Toshihiko Mukoyama, Richard Rogerson and Aysegul Sahin

Journal of Economic Theory, 2011, vol. 146, issue 3, 1107-1133

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 and idiosyncratic productivity 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.

Keywords: Labor; supply; Labor; market; frictions (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (76)

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Related works:
Working Paper: A Three State Model of Worker Flows in General Equilibrium (2009)
Working Paper: A Three State Model of Worker Flows in General Equilibrium (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:146:y:2011:i:3:p:1107-1133

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