Working Paper: NBER ID: w10655
Authors: Richard Rogerson; Robert Shimer; Randall Wright
Abstract: We survey search-theoretic models of the labor market and discuss their usefulness for analyzing labor market dynamics, job turnover, and wages. We first examine single-agent models, showing how they can incorporate many interesting features and generate rich predictions. We then consider equilibrium models that endogenize several variables that are treated parametrically in single-agent models, including the arrival rate of job offers and the wage distribution. We survey alternative formulations of these models, emphasizing two key issues: how workers and firms meet, and how wages are determined. We emphasize throughout the implications of alternative assumptions for turnover, wage dispersion, and efficiency.
Keywords: Labor Market; Search Theory; Job Turnover; Wages
JEL Codes: E2; J6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment Insurance (UI) (J65) | Reservation Wage (wr) (J31) |
| Reservation Wage (wr) (J31) | Observed Wage Distribution (J31) |
| Observed Wage Distribution (J31) | Average Unemployment Duration (J64) |
| Unemployment Insurance (UI) (J65) | Probability of Finding a Job (J68) |
| Job Offer Arrival Rates (J69) | Unemployment Spells (J64) |