Understanding the accumulation of match-specific capital is crucial in shedding light on the reasons for the prevalence of long-term employment relationships and on the welfare consequences of turnover in the labour market. One of the most important sources of match-specific capital is human...

Shimer (2005a) argues that the Mortensen-Pissarides equilibrium search model of unemployment explains only about 10% of the response in the job-finding rate to an aggregate productivity shock. Some of the recent papers inspired by his critique are reviewed and commented on here. Specifically, we...

Shimer (2005a) argues that the Mortensen-Pissarides equilibrium search model of unemployment explains only about 10% of the response in the job-finding rate to an aggregate productivity shock. Some of the recent papers inspired by his critique are reviewed and commented on here. Specifically, we...

The business-cycle behavior of a matching model with endogenous separations is studied in this paper. We show that whether aggregate productivity shocks have a larger effect on the vacancy-unemployment ratio than in a model with exogenous separations depends on whether worker productivity...