Variable Search Intensity in an Economy with Coordination Unemployment

Leo Kaas

No 3697, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes an urn-ball matching model in which workers decide how intensively they sample job openings and apply at a stochastic number of suitable vacancies. Equilibrium is not constrained efficient; entry is excessive and search intensity can be too high or too low. Moreover, an inefficient discouraged-worker effect among homogenous workers emerges under adverse labor market conditions. Unlike existing coordination-friction economies with fixed search intensity, the model can account for the empirical relation between the job-finding rate and the vacancy-unemployment ratio, provided that search costs are small and that search intensity is sufficiently procyclical.

Keywords: matching function; coordination frictions; unemployment (search for similar items in EconPapers)
JEL-codes: E24 J63 J64 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2008-09
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: The B.E. Journal of Macroeconomics: Contributions to Macroeconomics, 2010, 10 (1), Article 31

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