Directed Search over the Life Cycle / Guido Menzio, Irina A. Telyukova, Ludo Visschers.

Format:

Book

Author/Creator:

Menzio, Guido.

Contributor:

National Bureau of Economic Research.

Telyukova, Irina A.

Visschers, Ludo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17746.

NBER working paper series no. w17746

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it correctly predicts the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.

Notes:

Print version record

January 2012.