Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Workers

Gautier, Pieter A.

doi:10.1111/1468-0335.00269

Cited by 115 publications

(140 citation statements)

References 15 publications

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“…By considering a homogeneous pool of workers, these aspects are absent in PissaridesÕ analysis. Closer in spirit to our work is Gautier (2002). He uses essentially the same setup for production as we do.…”

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confidence: 93%

On the Job Search in a Matching Model with Heterogeneous Jobs and Workers

2008

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This article examines the effects of transitory skill mismatch in a matching model with heterogeneous jobs and workers. In our model, some highly-educated workers may accept unskilled jobs for which they are over-qualified but are allowed to engage in on-the-job search in pursuit of a better job. We show that this feature has relevant implications for the set of potential equilibria, the unemployment rates of the different types of workers, the degree of wage inequality, and the response of the labour market to shifts in the demand and supply of skills.An examination to select 175 postal workers for the region of Madrid yesterday gathered 15,570 candidates. Among them, 53% were college graduates (ÔlicenciadosÕ or ÔdiplomadosÕ) while the required educational attainment was upper secondary education (Ôgraduado escolarÕ) or an equivalent level of vocational training.(EL PAI´S, 23rd March, 2002).As the excerpt from a Spanish newspaper illustrates, mismatch between the skill requirements of jobs and the educational attainments of workers can be a pervasive feature in some labour markets. In this article, we study this phenomenon in a matching model with heterogeneous jobs (skilled and unskilled) on one side and heterogeneous workers (highly and less educated) on the other side of the market. Since the matching technology is imperfect, the highly educated workers may end up in unskilled jobs for which they are over qualified. A key element in our analysis is that mismatched workers are allowed to keep the option of moving to better jobs through on the job search (henceforth, OTJ search). Skill mismatch has therefore a transitory nature in our economy leading to job to job (hereafter, JTJ) transitions which are shown to have relevant implications for the composition of jobs, unemployment, wages and the reaction of the labour market to shifts in the demand and supply of skills.Labour economists have long recognised the importance of JTJ flows but it is only recently that the literature on equilibrium unemployment has started to explore its implications systematically.1 Our article contributes to this stream of research by * We are grateful to Steve Pischke (the Editor) and two anonymous referees for thoughtful comments and suggestions. We have also benefited from comments on ealier drafts of this article by James Albrecht, Pieter Gautier, Barbara Petrongolo, Robert Shimer, Manuel Santos and participants at various seminars. We would also like to thank Maite Blázquez and Juan R. García for excellent research assistance. The usual disclaimer applies. Financial support from the Consolider-Ingenio 2010 (Ministerio de Educaci on) and Excelecon (Comunidad de Madrid) projects is gratefully acknowledged.1 Broadly speaking, the literature on OTJ search can be divided in two strands. One strand uses models in the vein of Burdett and Mortensen (1998) to explain how OTJ search may give rise to wage differentials among identical workers; see, e.g., Mortensen (2003) for an excellent overview of this literature. The second strand inco...

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On the Job Search in a Matching Model with Heterogeneous Jobs and Workers

2008

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“…Both effects are common knowledge in the literature and this has been highlighted by Ortega (2000) paper on migration regarding foreign workers facing higher search costs and therefore receiving lower wages and also in Gautier (2002) regarding low-skilled and high-skilled workers competing for low-skilled jobs. However, in the context of retirement opportunities, the probability of exit also applies to unemployed people and thus directly affects the number of older job-seekers.…”

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confidence: 85%

“…At this point, there is no a priori reason to assume δ to be larger or smaller than 1. In this respect, we introduce heterogeneity in the labor force in a way similar to Acemoglu (1997) and Gautier (2002), who distinguished between high-skilled and low-skilled workers. However when hiring a younger worker the firm interiorizes that the worker will become old with a probability η y .…”

Section: The Model 21 Environmentmentioning

confidence: 99%

Unemployment and Retirement in a Model with Age‐specific Heterogeneity

Lefèbvre

2012

Labour

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This paper presents a model where young and old workers compete for one type of jobs in the presence of retirement opportunity. Within this framework, we show that increased retirement opportunities (such as early retirement) has most of the time a depressing impact on the unemployment rate. Indeed the number of vacancies posted by firms is influenced by the probability that an old worker is going into retirement. We show that the degree to which younger workers are influenced by retirement of older workers depends on the relative productivity of young and older workers. It is only when older workers are much more productive than young workers that retirement may benefit to unemployment.

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“…Because of the bad public transportation system in the United States, black workers have difficulties to reach jobs located too far away from their residential location and therefore they will only accept job offers located relatively close to where they live. White workers do accept jobs located further away because of their faster and 21 A condition that guarantees that both b x * W < 1/2, b x * B < 1/2 and the net wage w k (1 − τ x/μ k ) to be always strictly positive whatever x ∈ [0, 1/2], k ∈ {B, W } is (33), which is given in part B of the Appendix.…”

Section: The Steady-state Equilibrium Definition 1 a Steady-state Equmentioning

confidence: 99%

Car ownership and the labor market of ethnic minorities

Gautier

Zénou

2010

Journal of Urban Economics

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We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labor market outcomes.

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Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Workers

Cited by 115 publications

References 15 publications

On the Job Search in a Matching Model with Heterogeneous Jobs and Workers

On the Job Search in a Matching Model with Heterogeneous Jobs and Workers

Unemployment and Retirement in a Model with Age‐specific Heterogeneity

Car ownership and the labor market of ethnic minorities

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