Cabrales, Antonio; Hopenhayn, Hugo - Department of Economics and Business, Universitat … - 1998
We generalize the Mortensen-Pissarides (1994) model of the labor market with a more realistic structure for the stochastic process of the shocks to the worker-firm match. In this way we can acommodate the empirical observation that hazard rates of job termination decrease and average wages...