IT'S ABOUT TIME: IMPLICATIONS OF THE PERIOD LENGTH IN AN EQUILIBRIUM SEARCH MODEL

Ronald Wolthoff

International Economic Review, 2014, vol. 55, issue 3, 839-867

Abstract: Empirical evidence suggests that transitions between employment states are highly clustered around the first day of each workweek or month. I analyze the effect of this phenomenon by presenting an equilibrium search model in which the period length is a parameter determining the degree of clustering. Infinitesimally short periods result in a continuous‐time model with bilateral meetings, whereas longer time periods introduce the possibility of recall or simultaneity of job offers. In this environment, I show that the period length has a profound effect on equilibrium outcomes, including the unemployment rate, unemployment duration, and the cross‐sectional wage distribution.

Date: 2014
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https://doi.org/10.1111/iere.12073

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Working Paper: It's About Time: Implications of the Period Length in an Equilibrium Search Model (2013)
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