Premium
EFFICIENT LEARNING AND JOB TURNOVER IN THE LABOR MARKET
Author(s) -
Li Fei,
Weng Xi
Publication year - 2017
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.12233
Subject(s) - matching (statistics) , economics , unemployment , microeconomics , value (mathematics) , aggregate (composite) , transition (genetics) , labour economics , distribution (mathematics) , politics , computer science , mathematics , biochemistry , statistics , materials science , chemistry , machine learning , composite material , gene , economic growth , mathematical analysis , political science , law
This article nests a continuous‐time learning model a ̀la Jovanovic ( Journal of Political Economy 92 (1984), 108–22) into a directed on‐the‐job search framework. We prove that the socially efficient allocation is separable, that is, the workers' value functions and optimal controls are independent of both the distribution of workers across their current match qualities and the unemployment rate. We characterize the dynamics of job transitions in the efficient allocation. Furthermore, when the matching technology is linear, our numerical results show that increasing the vacancy creation cost and the speed of learning have ambiguous effects on the unemployment rate and aggregate job transition.