Job Dynamics, Correlated Shocks and Wage Profiles

Universitat Pompeu Fabra Economics WP No. 260

Posted: 7 Jul 1998

See all articles by Antonio Cabrales

Antonio Cabrales

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Hugo A. Hopenhayn

University of California, Los Angeles (UCLA) - Department of Economics

Date Written: 1998

Abstract

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

Cabrales, Antonio and Hopenhayn, Hugo A., Job Dynamics, Correlated Shocks and Wage Profiles (1998). Universitat Pompeu Fabra Economics WP No. 260. Available at SSRN: https://ssrn.com/abstract=105130

Antonio Cabrales (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 27 65 (Phone)
(34-93) 542 17 46 (Fax)

Hugo A. Hopenhayn

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States

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