A Discrete-Time Stochastic Model of Job Matching

Anthony E. Smith and Yves Zenou
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Anthony E. Smith: University of Pennsylvania

Review of Economic Dynamics, 2003, vol. 6, issue 1, 54-79

Abstract: In this paper, an explicit micro scenario is developed which yields a well-defined aggregate job matching function. In particular, a stochastic model of job-matching behavior is constructed in which the system steady state is shown to be approximated by an exponential-type matching function, as the population becomes large. This steady-state approximation is first derived for fixed levels of both wages and search intensities, where it is shown (without using a free-entry condition) that there exists a unique equilibrium. It is then shown that if job searchers are allowed to choose their search intensities optimally, this model is again consistent with a unique steady state. Finally, the assumption of a fixed wage is relaxed, and an optimal 'offer wage' is derived for employers (Copyright: Elsevier)

Keywords: discrete-time matching function; large population approximation; optimal search intensity; endogeneous wages. (search for similar items in EconPapers)
JEL-codes: D83 J41 J61 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (21)

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Working Paper: Online Appendix to "A Discrete-Time Stochastic Model of Job Matching" (2002)
Working Paper: A Discrete-Time Stochastic Model of Job Matching (2001)
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DOI: 10.1016/S1094-2025(02)00007-8

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