← Search

American Economic Review Vol. 107 No. 4 2017

The Macrodynamics of Sorting between Workers and Firms

Jeremy Lise1; Jean–Marc Robin2

1 Department of Economics, University of Minnesota, 4-101 Hanson Hall, 1925 S 4th Street, Minneapolis MN 55455 (e-mail: ) · 2 Sciences-Po, Department of Economics, 28 rue des Saints Pres, v75007 Paris, France, and University College London (e-mail: )

open access

Abstract

We develop an equilibrium model of on-the-job search with ex ante heterogeneous workers and firms, aggregate uncertainty, and vacancy creation. The model produces rich dynamics in which the distributions of unemployed workers, vacancies, and worker-firm matches evolve stochastically over time. We prove that the surplus function, which fully characterizes the match value and the mobility decision of workers, does not depend on these distributions. This result means the model is tractable and can be estimated. We illustrate the quantitative implications of the model by fitting to US aggregate labor market data from 1951–2012. The model has rich implications for the cyclical dynamics of the distribution of skills of the unemployed, the distribution of types of vacancies posted, and sorting between heterogeneous workers and firms.

DOI
10.1257/aer.20131118
Volume
107
Issue
4
Pages
1104-1135
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite