Mismatch, Sorting and Wage Dynamics

Jeremy Lise, Costas Meghir and Jean-Marc Robin

No 1886, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. The model is estimated on the NLSY using the method of moments.

Keywords: Matching; Equilibrium wage distributions; Job mobility; Simulated method of moments; MCMC (search for similar items in EconPapers)
JEL-codes: C15 J3 J6 J64 J65 J68 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-01
New Economics Papers: this item is included in nep-dge, nep-lab, nep-lma and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published in Review of Economic Dynamics � Volume in honor of Dale Mortensene (January 2016), 19: 63-87

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Related works:
Working Paper: Mismatch, Sorting and Wages Dynamics (2013)
Working Paper: Mismatch, Sorting and Wages Dynamics (2013)
Working Paper: Mismatch, sorting and wage dynamics (2013)
Working Paper: Mismatch, Sorting and Wage Dynamics (2013)
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