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LIFE‐CYCLE LABOR SEARCH WITH STOCHASTIC MATCH QUALITY
Author(s) -
EstebanPretel Julen,
Fujimoto Junichi
Publication year - 2014
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12062
Subject(s) - unemployment , matching (statistics) , economics , planner , quality (philosophy) , business cycle , human capital , labour economics , wage , search theory , econometrics , microeconomics , computer science , macroeconomics , mathematics , statistics , philosophy , epistemology , programming language , economic growth
In the United States, unemployment, job finding, and separation rates decline as worker age increases. To explain these facts, we build a search and matching model of the labor market that incorporates a life‐cycle structure and features random match quality as well as human capital accumulation. The calibrated model successfully reproduces the empirical patterns of unemployment and job transition rates over the life cycle and generates plausible wage implications. We then explore the efficiency implications of the model and find that the differences between the market and planner allocations are more important for older workers.