Search and Matching in the Labor Market without Unemployment Insurance

Francesc Obiols-Homs ()

No 670, Working Papers from Barcelona School of Economics

Abstract: I study the effect of the market arrangement on competitive allocations in a model in which the distribution of idiosyncratic uncertainty is determined endogenously. The particular application I consider is a search model of the labor market embedded in a general equilibrium model with production and asset accumulation. It is shown that costly search with incomplete markets introduces a wealth effect at low levels of wealth such that poor agents do not search much or even find optimal not to look for a job. The combination of this effect with the usual one at higher wealth levels delivers equilibrium allocations that are remarkably different from the one that obtains under complete markets. I also use numerical methods to obtain quantitative predictions in a calibrated version of the model. The effect of the market arrangement remains dramatically large due to search externalities.

Keywords: search; incomplete markets; general equilibrium (search for similar items in EconPapers)
JEL-codes: D52 D58 E24 J22 (search for similar items in EconPapers)
Date: 2015-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Search and matching in the labor market without unemployment insurance (2012)
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