Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284029 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Staff Report No. 1069
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
I build a tractable random search model with firm dynamics, on-the-job search, and aggregate shocks. Multi-worker firms make recruitment decisions, choose whether to enter or exit the market, and design wage contracts. Tractability is obtained by showing that, under a set of assumptions on the recruitment technology, the decisions of workers and firms can be expressed in terms of the firms' current productivity. I introduce a numerical solution method to accommodate aggregate shocks in this environment and show that the model can replicate salient features of both firm-level data on productivity and employment and aggregate time series describing the business cycle. I use this framework to quantify the drivers of worker reallocation over the recent business cycle in Britain.
Subjects: 
firm dynamics
search
business cycle
JEL: 
E3
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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