Search Results
Working Paper
Targeted Search in Matching Markets
We propose a parsimonious matching model where a person's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences?vertical versus horizontal?and that this interaction implies that preferences recovered using our model can look markedly different from those recovered using a model where the degree of ...
Break-even employment declines as unauthorized immigration outflows continue
For policymakers, interpreting labor market conditions increasingly requires looking beyond headline payroll growth and incorporating timely measures of immigration and labor supply.
Working Paper
The Dual Beveridge Curve
The U.S. Beveridge curve’s recent outward shift has puzzled economists. We argue that the key stylized fact requiring a new framework is the divergence between surging vacancies and stable hires from unemployment. We propose a dual-vacancy model that attributes this divergence to a rising share of “poaching” vacancies targeted at employed workers. The model’s core identification reveals a disconnect: the data force a conclusion that poaching vacancies account for most vacancy fluctuations, yet have a surprisingly small impact on actual job-to-job hiring. This mechanism is validated by ...
Break-even employment declined after immigration changes
Recent employment reports show U.S. payroll employment growth has cooled from its torrid pace in previous years, raising the question of whether this signals a healthy rebalancing or the start of a concerning slowdown.
Climbing the employment ladder tough when bottom rung is broken
Recent labor market data appear to reflect a low-hire, low-fire equilibrium. Because aggregate layoffs remain low by historical standards, the upward drift in the unemployment rate over the past two years is often viewed as a benign normalization process rather than a cyclical vulnerability.
Working Paper
The Dual Beveridge Curve
The U.S. Beveridge curve’s recent outward shift has puzzled economists. We argue that the key stylized fact requiring a new framework is the divergence between surging vacancies and stable hires from unemployment. We propose a dual-vacancy model that attributes this divergence to a rising share of “poaching” vacancies targeted at employed workers. The model’s core identification reveals a disconnect: the data force a conclusion that poaching vacancies account for most vacancy fluctuations, yet have a surprisingly small impact on actual job-to-job hiring. This mechanism is validated by ...
Working Paper
An Information-based Theory of Monopsony Power
We develop an information-based theory of monopsony power that unifies search frictions and job differentiation by endogenizing worker search and firm screening through rational inattention. The model yields a closed-form wage equation that decomposes the sources of monopsony power and nests directed and random search as limiting cases. The framework reconciles strong assortative matching with flat wage-productivity profiles, large wage markdowns with small firm wage effects, and high estimated labor supply elasticities with substantial monopsony power. Estimating the model on a matched ...
Working Paper
Endogenous Markups and Trade Elasticities
We develop a search model of international trade where buyers allocate costly cognitive attention across suppliers. Suppliers exploit the cost of shifting attention to extract markups, giving dominant firms the cushion to absorb cost shocks while marginal suppliers pass them on. Validating this mechanism with US tariff data, we estimate a highly concentrated US domestic market. Consequently, while targeted tariffs spur offshore substitution, blanket tariffs force buyers toward captive domestic monopolies. Incumbents' growing market power raises markups and halves the aggregate macro ...
Working Paper
Endogenous Markups and Trade Elasticities
We develop a search model of international trade where buyers allocate costly cognitive attention across suppliers. Suppliers exploit the cost of shifting attention to extract markups, giving dominant firms the cushion to absorb cost shocks while marginal suppliers pass them on. Validating this mechanism with U.S. tariff data, we estimate a highly concentrated U.S. domestic market. Consequently, while targeted tariffs spur offshore substitution, blanket tariffs force buyers toward captive domestic monopolies. Incumbents’ growing market power raises markups and halves the aggregate macro ...
Working Paper
Endogenous Markups and Trade Elasticities
We develop a search model of international trade where buyers allocate costly cognitive attention across suppliers. Suppliers exploit the cost of shifting attention to extract markups, giving dominant firms the cushion to absorb cost shocks while marginal suppliers pass them on. Validating this mechanism with U.S. tariff data, we estimate a highly concentrated U.S. domestic market. Consequently, while targeted tariffs spur offshore substitution, blanket tariffs force buyers toward captive domestic monopolies. Incumbents’ growing market power raises markups and halves the aggregate macro ...