Efficiency and Labor Market Dynamics in a Model of Labor Selection

Sanjay Chugh and Christian Merkl

No 9291, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper characterizes efficient labor-market allocations in a labor selection model. The model's crucial aspect is cross-sectional heterogeneity for new job contacts, which leads to an endogenous selection threshold for new hires. With cross-sectional dispersion calibrated to microeconomic data, 40 percent of empirically-relevant fluctuations in the job-finding rate arise, which contrasts with results in an efficient search and matching economy. The efficient selection model's results hold in partial and general equilibrium, as well as with sequential search.

Keywords: sequential search; hiring costs; labor market frictions; labor selection; labor market; efficiency; amplification (search for similar items in EconPapers)
JEL-codes: E24 E32 J20 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2015-08
New Economics Papers: this item is included in nep-dge, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Forthcoming - published in: International Economic Review, 2016, 57 (4), 1371–1404.

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https://docs.iza.org/dp9291.pdf (application/pdf)

Related works:
Working Paper: Efficiency and Labor Market Dynamics in a Model of Labor Selection (2015)
Working Paper: Efficiency and Labor Market Dynamics in a Model of Labor Selection (2013)
Working Paper: Efficiency and Labor Market Dynamics in a Model of Labor Selection (2011)
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