Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324832 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. WP 2025-10
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
We develop a model where heterogeneous agents choose whether to engage in onthe-job search (OJS) to improve labor income. The model accounts for untargeted microdata patterns: fiscal incentives affect job-to-job mobility and wage growth of stayers-but not leavers-across the income distribution, pointing to OJS as a key driver of labor costs. Calibrated to micro and macro moments, the model shows that OJS cost shocks significantly affect real activity and inflation. The permanent decline in OJS costs-driven by ICT and AI-based tools-offers a novel explanation for the weakening of the unemployment-inflation relationship documented in empirical studies.
Subjects: 
Job ladder models
inflation
Danish microdata, wages
bargaining
tax incentives
JEL: 
E31
J64
E12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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