Board of Governors of the Federal Reserve System (U.S.)
Finance and Economics Discussion Series
This paper presents a model in which mismatch employment arises in a constrained efficient equilibrium. In the decentralized economy, however, mismatch gives rise to a congestion externality whereby heterogeneous job seekers fail to internalize how their individual actions affect the labor market outcomes of competitors in a common unemployment pool. We provide an analytic characterization of this distortion, assess the distributional nature of the associated welfare effects, and relate it to the relative productivity of low- and high-skilled workers competing for similar jobs.
Cite this item
David M. Arseneau & Brendan Epstein, Efficient Mismatch, Board of Governors of the Federal Reserve System (U.S.), Finance and Economics Discussion Series 2018-037, 01 Jun 2018.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
Keywords: Competitive search equilibrium ; Crowding in/out ; Labor market frictions ; Skill-mismatch
This item with handle RePEc:fip:fedgfe:2018-37
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