A note on the life-cycle search and matching model with segmented labor markets

Recently, there has been renewed interest in labor search and matching models that incorporate a life-cycle structure by assuming finite horizons. Existing studies provide detailed analyses on the age dynamics of job creation and destruction, assuming that workers of all ages search for jobs in the same market. This paper examines a related environment that has drawn less attention, where the labor market is exogenously segmented by age. The paper finds sufficient conditions for the model to yield unambiguous predictions on the age profiles of key variables, and compares them with the corresponding conditions in models with a single market. The paper further examines the age profiles of these key variables in the efficient allocation. In particular, with no persistence in idiosyncratic match productivity, the efficient allocation is found to exhibit monotonic age profiles for the job finding and separation rates.