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Directed Search over the Life Cycle

Guido Menzio (), Irina Telyukova () and Ludo Visschers ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it predicts quite well the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.

Keywords: directed search; labor reallocation; lifecycle (search for similar items in EconPapers)
JEL-codes: E24 J63 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2015-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

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http://www.econ.ed.ac.uk/papers/id254_esedps.pdf

Related works:
Journal Article: Directed Search over the Life Cycle (2016) Downloads
Working Paper: Directed Search over the Life Cycle (2015) Downloads
Working Paper: Directed search over the life cycle (2012) Downloads
Working Paper: Directed Search over the Life Cycle (2012) Downloads
Working Paper: Directed Search over the Life Cycle (2012) Downloads
Working Paper: Directed search over the life cycle (2011) Downloads
Working Paper: Directed Search over the Life Cycle (2010) Downloads
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