502 Kern Building
Department of Economics
Penn State University
Information about this author at RePEc
NBER Working Papers and Publications
|April 2009||Efficient Search on the Job and the Business Cycle|
with Guido Menzio: w14905
We build a directed search model of the labor market in which workers' transitions between unemployment, employment, and across employers are endogenous. We prove the existence, uniqueness and efficiency of a recursive equilibrium with the property that the distribution of workers across employment states affects neither the agents' values and strategies nor the market tightness. Because of this property, we are able to compute the equilibrium outside the non-stochastic steady-state. We use a calibrated version of the model to measure the effect of productivity shocks on the US labor market. We find that productivity shocks generate procyclical fluctuations in the rate at which unemployed workers become employed and countercyclical fluctuations in the rate at which employed workers become ...
Published: Guido Menzio & Shouyong Shi, 2011. "Efficient Search on the Job and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 468 - 510. citation courtesy of
|Block Recursive Equilibria for Stochastic Models of Search on the Job|
with Guido Menzio: w14907
In this paper, we develop a general stochastic model of directed search on the job. Like in the analogous models of random search on the job, the state of the economy in our model includes the infinite-dimensional distribution of workers across different employment states (unemployment, and employment at different wages). Unlike the analogous models of random search on the job, our model admits an equilibrium in which the agents' value and policy functions do not depend on the distribution of workers. We refer to this type of equilibrium as a Block Recursive Equilibrium. Therefore, while solving the equilibrium of a random search model in a stochastic environment is a difficult task both analytically and computationally, solving the Block Recursive Equilibrium of our model is as easy as so...
Published: Menzio, Guido & Shi, Shouyong, 2010.
"Block recursive equilibria for stochastic models of search on the job,"
Journal of Economic Theory,
Elsevier, vol. 145(4), pages 1453-1494, July.
citation courtesy of