Labor-market Volatility in a Matching Model with Worker Heterogeneity and Endogenous Separations

Andri Chassamboulli

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: Recessions are times when the quality of the unemployment pool is lower, because entry into unemployment is biased in favor of low-productivity workers. I develop a search and matching model with worker heterogeneity and endogenous separations that has this feature. I show that in a recession a compositional shift in unemployment towards low-productivity workers, due an increase in job separations, lowers the matching effectiveness of searching firms, thereby causing their average recruiting cost to rise. This acts to further depress vacancy creation in a recession. In contrast to most models that allow for endogenous separations, this model generates a realistic Beveridge curve correlation.

Keywords: search and matching; endogenous separations; worker heterogeneity; un-employment; vacancies volatility (search for similar items in EconPapers)
Pages: 25 pages
Date: 2010-12
New Economics Papers: this item is included in nep-dge and nep-lab
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Labor-market volatility in a matching model with worker heterogeneity and endogenous separations (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:13-2010

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