Job Dynamics, Correlated Shocks and Wage Profiles
Universitat Pompeu Fabra Economics WP No. 260
Posted: 7 Jul 1998
Date Written: 1998
We generalize the Mortensen-Pissarides (1994) model of the labor market with a more realistic structure for the stochastic process of the shocks to the worker-firm match. In this way we can accommodate the empirical observation that hazard rates of job termination decrease and average wages increase with job tenure. Besides being able to fit better some observables of the model, the changes we introduce are non-trivial for the analysis of policies as well.
JEL Classification: J60, J30
Suggested Citation: Suggested Citation