Labor and productivity play central roles in the aging population problem in all developed countries. The understanding of labor allocation among different productivity levels is required for policy issues, specifically, the dynamics of how workers are allocated and reallocated among sectors. We...

The search and matching model has recently come under criticism for its inability to account for some of the cyclical properties of the U.S. labor market. Shimer (2005) has shown that the basic version of the model is incapable of reproducing the volatility of the market tightness for reasonable...