Journal of Political Economy Vol. 128 No. 12 2020
Declining Search Frictions, Unemployment, and Growth
open access
Abstract
For a search-theoretic model of the labor market, we seek conditions for the existence of a balanced growth path (BGP), where unemployment, vacancy, and worker’s transitions rates remain constant in the face of improvements in the production and search technologies. A BGP exists iff firm-worker matches are inspection goods and the quality of a match is drawn from a Pareto distribution. Declining search frictions contribute to growth with an intensity determined by the tail coefficient of the Pareto distribution. We develop a strategy to measure the rate of decline of search frictions and their contribution to growth.
- DOI
- 10.1086/710975
- Volume
- 128
- Issue
- 12
- Pages
- 4387-4437
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref