Heterogeneity and Cyclical Unemployment
Yongsung Chang () and
Sun-Bin Kim ()
No 543, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)
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: 31 pages
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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:roc:rocher:543
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