Search-Theoretic Models of the Labor Market-A Survey

Richard Rogerson, Robert Shimer, Randall Wright

NBER Working Paper No. 10655
Issued in July 2004
NBER Program(s):   EFG   LS

We survey search-theoretic models of the labor market and discuss their usefulness for analyzing labor market dynamics, job turnover, and wages. We first examine single-agent models, showing how they can incorporate many interesting features and generate rich predictions. We then consider equilibrium models that endogenize several variables that are treated parametrically in single-agent models, including the arrival rate of job offers and the wage distribution. We survey alternative formulations of these models, emphasizing two key issues: how workers and firms meet, and how wages are determined. We emphasize throughout the implications of alternative assumptions for turnover, wage dispersion, and efficiency.

(550 K)

Published: Rogerson, Richard, Robert Shimer and Randall Wright. "Search-Theoretic Models Of The Labor Market: A Survey," Journal of Economic Literature, 2005, v43(4,Dec), 959-988.

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