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AN INCENTIVE THEORY OF MATCHING
Macroeconomic dynamics, 2015-04, Vol.19 (3), p.643-668
[Peer Reviewed Journal]
Copyright © Cambridge University Press 2013 ;ISSN: 1365-1005 ;EISSN: 1469-8056 ;DOI: 10.1017/S1365100513000527
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Title:
AN INCENTIVE THEORY OF MATCHING
Author:
Brown, Alessio
;
Merkl, Christian
;
Snower, Dennis
Subjects:
Business cycles
;
Calibration
;
Central banks
;
Costs
;
Decision making
;
Economic models
;
Economic statistics
;
Economic theory
;
Employee turnover
;
Employers
;
Employment
;
Global economy
;
Incentives
;
Labor economics
;
Labor market
;
Macroeconomics
;
Microeconomics
;
New employees
;
Studies
;
Unemployment
;
Wages & salaries
;
Workers
Is Part Of:
Macroeconomic dynamics, 2015-04, Vol.19 (3), p.643-668
Description:
This paper presents a theory of the labor market matching process in terms of incentive-based, two-sided search among heterogeneous agents. The matching process is decomposed into its two component stages: the contact stage, in which job searchers make contact with employers, and the selection stage, in which they decide whether to match. We construct a theoretical model explaining two-sided selection through microeconomic incentives. Firms face adjustment costs in responding to heterogeneous variations in the characteristics of workers and jobs. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. Our calibrated model for the United States can account for important empirical regularities, such as the large volatilities of labor market variables, that the conventional matching model cannot.
Publisher:
New York, USA: Cambridge University Press
Language:
English
Identifier:
ISSN: 1365-1005
EISSN: 1469-8056
DOI: 10.1017/S1365100513000527
Source:
ProQuest Central
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