Job dynamics, correlated shocks and wage profiles

Antonio Cabrales and Hugo Hopenhayn

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We generalize the Mortensen-Pissarides (1994) model of the labor market with a more realistic structure for the stochastic process of the shocks to the worker-firm match. In this way we can acommodate the empirical observation that hazard rates of job termination decrease and average wages increase with job tenure. Besides being able to fit better some observables of the model, the changes we introduce are nontrivial for the analysis of policies as well.

Keywords: Layoff costs; search; layoff hazard rates; wage-tenure relationship (search for similar items in EconPapers)
JEL-codes: J30 J60 (search for similar items in EconPapers)
Date: 1998-01
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:260

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