Heterogeneity and Cyclical Unemployment

Mark Bils, Yongsung Chang and Sun-Bin Kim

Discussion Paper Series from Institute of Economic Research, Korea University

Abstract: We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion in wages across workers and realistic cyclical fluctuations in unemployment.

Pages: 42 pages
Date: 2008
New Economics Papers: this item is included in nep-dge and nep-lab
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Heterogeneity and Cyclical Unemployment (2009)
Working Paper: Heterogeneity and Cyclical Unemployment (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:iek:wpaper:0805

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