Sorting and the Output Loss due to Search Frictions

Pieter Gautier and Coen N. Teulings
Additional contact information
Coen N. Teulings: University of Amsterdam

No 11-010/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to a publication in the 'Journal of the European Economic Association' .

We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationship between (i) the unemployment rate, (ii) the value of non-market time, and (iii) the max-mean wage differential. The latter measure of wage dispersion is more robust than measures based on the reservation wage, due to the long left tail of the wage distribution. We estimate this wage differential using data on match quality and allow for measurement error. The estimated wage dispersion and mismatch for the US is consistent with an unemployment rate of 5%. Finally, we find that without search frictions, output would be 6.6% higher.

Keywords: Sorting; search frictions; wage dispersion; unemployment; mismatch; on-the-job search; output loss; business stealing (search for similar items in EconPapers)
JEL-codes: E24 J62 J63 J64 (search for similar items in EconPapers)
Date: 2011-01-14, Revised 2012-01-26
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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https://papers.tinbergen.nl/11010.pdf (application/pdf)

Related works:
Journal Article: SORTING AND THE OUTPUT LOSS DUE TO SEARCH FRICTIONS (2015)
Working Paper: Sorting and the output loss due to search frictions (2012)
Working Paper: Sorting and the output loss due to search frictions (2012)
Working Paper: Sorting and the Output Loss due to Search Frictions (2011)
Working Paper: Sorting and the output loss due to search frictions (2011)
Working Paper: Sorting and the Output Loss Due to Search Frictions (2011)
Working Paper: Sorting and the output loss due to search frictions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20110010

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