A discrete-time stochastic model of job matching
A discrete-time stochastic model of job matching
In this paper, an explicit micro scenario is developed which yields a well-defined aggregate job matching function. In particular, a stochastic model of job-matching behavior is constructed in which the system steady state is shown to be approximated by an exponential-type matching function, as the population becomes large.
This steady-state approximation is first derived for fixed levels of both wages and search intensities, where it is shown (without using a free-entry condition) that there exists a unique equilibrium. It is then shown that if job searchers are allowed to choose their search intensities optimally, this model is again consistent with a unique steady state. Finally, the assumption of a fixed wage is relaxed, and an optimal ‘offer wage’ is derived for employers.
search, job matching, large population approximation, optimal search intensity, endogenous wages
54-79
Smith, Tony E.
5447375a-2f26-4e65-9ad0-953d55a63c30
Zenou, Yves
f7c3b72f-b6b6-4550-8b0f-00a127af082e
2003
Smith, Tony E.
5447375a-2f26-4e65-9ad0-953d55a63c30
Zenou, Yves
f7c3b72f-b6b6-4550-8b0f-00a127af082e
Abstract
In this paper, an explicit micro scenario is developed which yields a well-defined aggregate job matching function. In particular, a stochastic model of job-matching behavior is constructed in which the system steady state is shown to be approximated by an exponential-type matching function, as the population becomes large.
This steady-state approximation is first derived for fixed levels of both wages and search intensities, where it is shown (without using a free-entry condition) that there exists a unique equilibrium. It is then shown that if job searchers are allowed to choose their search intensities optimally, this model is again consistent with a unique steady state. Finally, the assumption of a fixed wage is relaxed, and an optimal ‘offer wage’ is derived for employers.
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Published date: 2003
Keywords:
search, job matching, large population approximation, optimal search intensity, endogenous wages
Identifiers
Local EPrints ID: 33406
URI: http://eprints.soton.ac.uk/id/eprint/33406
ISSN: 1094-2025
PURE UUID: 702fe17d-1ea4-484d-990b-0be40b076afc
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Date deposited: 16 May 2006
Last modified: 15 Mar 2024 07:44
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Author:
Tony E. Smith
Author:
Yves Zenou
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