Heterogeneity and Cyclical Unemployment
University of Rochester - Department of Economics; National Bureau of Economic Research (NBER)
University of Rochester - Department of Economics; Yonsei University - Department of Economics
Concordia University, Quebec - Department of Economics
NBER Working Paper No. w15166
We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.
Number of Pages in PDF File: 37working papers series
Date posted: July 21, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.469 seconds