Factor Market Search and the Structure of Simple General Equilibrium Models
Journal of Political Economy
1990
This paper presents a simple general equilibrium model in which unemployed workers search for jobs and vacant firms search for employees. Formally, I develop a two-sector, constrained efficient version of the Diamond-Mortensen-Pissarides matching model of trade coordination. This approach to modeling factor market search appears promising since its algebraic development parallels Jones's treatment of the two-sector model of production, and the latter framework underlies most applied general equilibrium analyses. Some illustrative short-run and steady-state results are presented concerning the behavior of open and closed economies that exhibit unemployment and vacancies.
- DOI
- 10.1086/261680
- Volume
- 98 (2)
- Pages
- 325-355
- Language
- en
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- Sources
- openalex crossref