Evaluating the Performance of the Search and Matching Model

Eran Yashiv ()

No 5363, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Does the search and matching model fit aggregate US labour market data? While the model has become an important tool of macroeconomic analysis, recent literature pointed to some significant failures in accounting for the data. This paper aims to answer two questions: (i) Does the model fit the data, and, if so, on what dimensions? (ii) Does the data 'fit' the model, i.e. what are the data which are relevant to be explained by the model? The analysis shows that the model fits certain specifications of the data on many dimensions, though not on all. This includes capturing the high persistence and high volatility of most of the key variables, the negative co-variation of unemployment and vacancies, and the behaviour of the worker job finding rate. A key role in this fit is played by the convexity of hiring costs and the stochastic properties of the separation rate. The latter is a major component of the rate discounting the future value of the job-worker match. The paper offers a workable, empirically-grounded version of the model for the analysis of aggregate US labour market dynamics.

Keywords: Search; Matching; Us labour market; Vacancies; Labour market flows; Business cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 J32 J63 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://cepr.org/publications/DP5363 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Evaluating the performance of the search and matching model (2006)
Working Paper: Evaluating the Performance of the Search and Matching Model (2006)
Working Paper: Evaluating the Performance of the Search and Matching Model (2005)
Working Paper: Evaluating the performance of the search and matching model (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5363

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5363

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().