Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86753
Authors: 
Gautier, Pieter A.
Teulings, Coen N.
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper 11-010/3
Abstract: 
We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationshipbetween (i) the unemployment rate, (ii) the value of non-market time, and (iii) themax-mean wage differential. The latter measure of wage dispersion is more robustthan measures based on the reservation wage, due to the long left tail of the wagedistribution. We estimate this wage differential using data on match quality andallow for measurement error. The estimated wage dispersion and mismatch for theUS is consistent with an unemployment rate of 5%. Finally, we find that withoutsearch frictions, output would be 6.6% higher.
Subjects: 
Sorting
search frictions
wage dispersion
unemployment
mismatch
on-the-job search
output loss
business stealing
JEL: 
E24
J62
J63
J64
Document Type: 
Working Paper

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