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  3. American Economic Journal: Macroeconomics
  4. January 2011
  5. Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations

Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations

  • Mark Bils
  • Yongsung Chang
  • Sun-Bin Kim
American Economic Journal: Macroeconomics
vol. 3, no. 1, January 2011
(pp. 128-54)
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Abstract

We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off—it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment. (JEL D31, E24, E32, J41, J63)

Citation

Bils, Mark, Yongsung Chang, and Sun-Bin Kim. 2011. "Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations." American Economic Journal: Macroeconomics, 3 (1): 128-54. DOI: 10.1257/mac.3.1.128

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • E32 Business Fluctuations; Cycles
  • J41 Labor Contracts
  • J63 Labor Turnover; Vacancies; Layoffs
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