Report

A model of job and worker flows

Abstract: We develop a model of gross job and worker flows and use it to study how the wages, permanent incomes, and employment status of individual workers evolve over time. Our model helps explain various features of labor markets, such as the amount of worker turnover in excess of job reallocation, the length of job tenures and unemployment duration, and the size and persistence of the changes in income that workers experience due to displacements or job-to-job transitions. We also examine the effects that labor market institutions and public policy have on the gross flows, as well as on the resulting wage distribution and employment in the equilibrium. From a theoretical standpoint, we propose a notion of competitive equilibrium for random matching environments, and study the extent to which it achieves an efficient allocation of resources.

Keywords: Labor mobility; Labor market; Labor turnover;

Status: Published in Journal of Political Economy> (Vol. 115, No. 5, October 2007, pp. 770-819)

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Staff Report

Publication Date: 2006

Number: 358