Equilibrium matching and termination

Cheng Wang and Youzhi Yang ()

Journal of Monetary Economics, 2015, vol. 76, issue C, 208-229

Abstract: In an equilibrium model of the labor market with moral hazard, jobs are dynamic contracts, job separations are terminations of optimal dynamic contracts. Transitions from unemployment to new jobs are modeled as a process of random matching and Nash bargaining. Non-employed workers make consumption and saving decisions as in a standard growth model, as well as whether or not to participate in the labor market. The stationary equilibrium is characterized. The model is then calibrated to the U.S. labor market to study quantitatively the worker flows and distributions, the compensation dynamics, and the effects of UI system.

Keywords: Optimal employment contracting; Matching; Termination (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:76:y:2015:i:c:p:208-229

DOI: 10.1016/j.jmoneco.2015.10.003

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