Efficient Search on the Job and the Business Cycle

Menzio, Guido; Shi, Shouyong

doi:10.1086/660864

Cited by 271 publications

(219 citation statements)

References 38 publications

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“…15 Nevertheless, the number of papers that confronts directed search models with the data is still very limited. Two exceptions are Menzio & Shi (2008), who do calibration for the US labor market, and Fu (2009), who estimates a model of college applications and admissions. To the best of my knowledge, this paper is the first to estimate a directed search model on microdata of the labor market.…”

Section: Figure 1: Related Literaturementioning

confidence: 99%

“…The theoretical analysis by Galenianos & Kircher (2009) suggests that directed search models may be better able to explain the downward sloping part in the wage distributions that is typically found in the data and cannot easily be fitted with random search models. As shown by Menzio & Shi (2008, directed search models also have the advantage that they are a lot more tractable when analyzing the dynamics out of steady state.…”

Section: Figure 1: Related Literaturementioning

confidence: 99%

“…A higher value of r therefore increases the matching probability of both the firm and the workers 16 It is straightforward to extend the model such that one can analyze the dynamics out of steady state, using a Block Recursive Equilibrium as in Menzio & Shi (2008 applying to the firm. However, choosing a higher value for r is also more costly for the firm.…”

Section: Modelmentioning

confidence: 99%

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Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search

Wolthoff

2012

SSRN Journal

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Most of the literature analyzing equilibrium effects of labor market policies assumes bilateral meetings between workers and firms. This ignores the frictions that arise when workers and firms meet in a multilateral way and cannot coordinate their application and hiring decisions. I analyze the magnitude of these frictions. For this purpose, I present an equilibrium search model of the labor market with an endogenous number of contacts between workers and firms. Firms post a wage and a recruitment technology that determines how many applicants they will interview. After observing these contracts, workers decide to which firms to apply. Sending more applications and interviewing more applicants are both costly activities but increase the probability to match. In equilibrium, contract dispersion arises endogenously and workers spread their applications over the different types of contracts. Estimation of the model on the Employment Opportunities Pilot Projects data set provides values for the cost of an application and the cost of an interview. These estimates are used to determine the output loss compared to a Walrasian world. Frictions on the worker and the firm side reduce output by approximately 1% each. There is a potential role for activating labor market policies, because I show that for the estimated parameter values welfare can be improved if unemployed workers increase their search intensity.

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Section: Figure 1: Related Literaturementioning

confidence: 99%

Section: Figure 1: Related Literaturementioning

confidence: 99%

Section: Modelmentioning

confidence: 99%

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Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search

Wolthoff

2012

SSRN Journal

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“…Menzio and Shi (2011) and Robin (2011) have looked at the consequences of aggregate productivity shocks in models with heterogeneous jobs and on-the-job search. In these models, aggregate productivity shocks a¤ect movement from job to job, and have a major impact on the destruction and creation of low-productivity jobs, with no need to advance any hypothesis about wage rigidity.…”

Section: Theorymentioning

confidence: 99%

Search, flows, job creations and destructions

Cahuc

2014

Labour Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper presents a short overview of dynamic models of labor markets with transaction costs. It shows that these models have deeply renewed the understanding of job search, job flows, job creations and destructions, unemployment and wage formation. It argues that this renewal provides a very useful toolkit for analyzing important economic policy issues such as the optimal level of unemployment benefits, the funding of unemployment insurance and the impact of employment protection legislation.JEL Classification: J6, J31, J38

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“…This feature of the model greatly simplifies the solution and equilibrium computation, and means that the equilibrium conditions defined in section 6.7 hold in and out of steady state. The directed search literature (e.g., Menzio and Moen (2010) and Menzio and Shi (2011)) uses the free entry condition in a similar way. Furthermore, the model implies a spike in entry and exit J(w n , w n ) days after the shock, as well as 2 × J(w n , w n ), 3 × J(w n , w n ), etc.…”

Section: Entry and Product Price Responsementioning

confidence: 99%

Firm Dynamics and the Minimum Wage: A Putty-Clay Approach

2013

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We document two new findings about the industry-level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty-clay technology that is consistent with these findings. In the model, continuing restaurants cannot change employment, and thus industry-level adjustment occurs gradually through exit of labor-intensive restaurants and entry of capital-intensive restaurants. We also show that the putty-clay model matches many other findings in the empirical minimum wage literature, including a small short run disemployment effect of the minimum wage and complete price pass-through. Interestingly, however, the putty-clay model produces a larger long run disemployment effect of the minimum wage.

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Efficient Search on the Job and the Business Cycle

Cited by 271 publications

References 38 publications

Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search

Applications and Interviews: A Structural Analysis of Two-Sided Simultaneous Search

Search, flows, job creations and destructions

Firm Dynamics and the Minimum Wage: A Putty-Clay Approach

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