We build an analytically and computationally tractable stochastic equilibrium model of unemployment in heterogeneous labor markets. Facing search frictions within markets and reallocation frictions between markets, workers endogenously separate from employment and endogenously reallocate between...

We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationship between (i) the unemployment rate, (ii) the value of non-market time, and (iii) the max-mean wage differential. The latter measure of...

The decisions of firms on investment and hiring play a crucial role in business cycle fluctuations. This paper explores their dynamic behavior in the presence of frictions. It does so within a unified framework, stressing their mutual dependence and placing the emphasis on their joint,...

We use a novel approach to studying the heterogeneity in the job finding rates of the nonemployed by classifying the nonemployed by labor force status (LFS) histories, instead of using only one-month LFS. Job finding rates differ substantially across LFS histories: they are 25-30% among those...

That football Head Coaches will be dismissed for poor performance and will quit when they have better outside options seems to be nothing more than a statement of the obvious. But owners may find it hard to distinguish poor performance from bad luck and may find it difficult to identify and...

The past four decades have witnessed dramatic changes in the structure of employment. In particular, the rapid increase in computational power has led to large-scale reductions in employment in jobs that can be described as intensive in routine tasks. These jobs have been shown to be...

We use linked longitudinal data on employers and employees to estimate how the 2003-2005 Hartz reforms affected the wages of displaced German workers after they returned to work. We also present a simple new method to decompose the wage effects into components attributable to selection on...

This paper deals with empirical matching functions. The paper is innovative in several ways. First, unlike in most of the existing literature, matching functions are estimated not only on aggregate, but also on disaggregate levels which is unusual due to the scarcity of appropriate data....

Existing research has shown that job displacement leads to large and persistent earnings losses for men, but evidence for women is scarce. Using administrative data from Germany, we apply an event study design in combination with propensity score matching and a reweighting technique to directly...

Who fares worse in an economic downturn, low- or high-paying firms? Different answers to this question imply very different consequences for the costs of recessions. Using U.S. employer-employee data, we find that employment growth at low-paying firms is less cyclically sensitive. High-paying...