Search-Theoretic Models of the Labor Market-A Survey
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.
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.