Equilibrium matching and termination |
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| Institution: | 1. School of Economics, Fudan University, China;2. School of Economics and Key Laboratory of Mathematical Economics, Shanghai University of Finance and Economics, China;1. Assistant Professor Department of Computer Science and Engineering Anna University Regional Office, Madurai, Tamilnadu, India;2. Professor Department of Information Technology K.L.N.College of Engineering, Pottapalayam, Sivaganga, Tamil Nadu, India;1. Accounting and Finance Group, Manchester Business School, University of Manchester, Booth Street West, Manchester M15 6PB, UK;2. Department of Economics, Boston University, 270 Bay State Road, Boston MA 02215, USA;3. CEMA, Central University of Finance and Economics, Beijing, China;4. AFR, Zhejiang University, Hangzhou, China;1. University of Zurich, Department of Banking and Finance, Switzerland;2. European Central Bank, Germany;3. Swiss Finance Insitute, Switzerland;4. University of Zurich, Department of Business Administration, Switzerland;1. Deutsche Bundesbank, Research Centre, Wilhelm-Epstein-Str. 14, 60431 Frankfurt, Germany;2. Bank of Italy, Via Nationale 91, 00184 Rome, Italy;1. Department of Economics, Concordia University, 1455 de Maisonneuve Blvd. West, Montréal, QC Canada H3G 1M8;2. CIREQ, Montréal, QC, Canada;3. Department of Economics, National University of Mongolia, Baga Toiruu 4, Ulaanbaatar, Mongolia;1. University of Pennsylvania, United States;2. National Bureau of Economic Research, United States;3. Cornell University, United States |
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| Abstract: | In an equilibrium model of the labor market with moral hazard, jobs are dynamic contracts, job separations are terminations of optimal dynamic contracts. Transitions from unemployment to new jobs are modeled as a process of random matching and Nash bargaining. Non-employed workers make consumption and saving decisions as in a standard growth model, as well as whether or not to participate in the labor market. The stationary equilibrium is characterized. The model is then calibrated to the U.S. labor market to study quantitatively the worker flows and distributions, the compensation dynamics, and the effects of UI system. |
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| Keywords: | Optimal employment contracting Matching Termination |
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