The Employed, the Unemployed, and the Unemployable: Directed Search with Worker Heterogeneity

Suren Basov, Ian King and Lawrence Uren

No 2010.03, Working Papers from School of Economics, La Trobe University

Abstract: We examine the implications of worker heterogeneity on the equilibrium matching process, using a directed search model. Worker abilities are selected from a general distribution, subject to some weak regularity requirements, and the firms direct their job offers to workers. We identify conditions under which some fraction of the workforce will be "unemployable": no firm will approach them even though they offer positive surplus. For large markets we derive a simple closed form expression for the equilibrium matching function. This function has constant returns to scale and two new terms, which are functions of the underlying distribution of worker productivities: the percentage of unemployable workers, and a measure of heterogeneity ().The equilibrium unemployment rate is increasing in and, under certain circumstances, is increasing in the productivity of highly skilled workers, despite endogenous entry. A key empirical prediction of the theory is that 1. We examine this prediction, using data from several countries.

Keywords: Directed search; worker heterogeneity; unemployment. (search for similar items in EconPapers)
JEL-codes: C78 J41 J64 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2010-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.latrobe.edu.au/__data/assets/pdf_file/0005/130919/2010.03.pdf First version, 2010.03 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.latrobe.edu.au/__data/assets/pdf_file/0005/130919/2010.03.pdf [301 Moved Permanently]--> https://www.latrobe.edu.au/__data/assets/pdf_file/0005/130919/2010.03.pdf)

Related works:
Working Paper: The Employed, the Unemployed, and the Unemployable: Directed Search with Worker Heterogeneity (2011)
Working Paper: The Employed, the Unemployed, and the Unemployable: Directed Search with Worker Heterogeneity (2010)
Working Paper: The Employed, the Unemployed, and the Unemployable: Directed Search with Worker Heterogeneity (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:trb:wpaper:2010.03

Access Statistics for this paper

More papers in Working Papers from School of Economics, La Trobe University Contact information at EDIRC.
Bibliographic data for series maintained by Stephen Scoglio ( this e-mail address is bad, please contact ).