This paper develops a Walrasian equilibrium theory of establishment level dynamics and matching frictions and uses it …"This paper develops a Walrasian equilibrium theory of establishment level dynamics and matching frictions and uses it … to evaluate the effects of congestion externalities in the matching process and determine the government interventions …

of random matching. Workers react to UI policy through job acceptance decisions; firms react to UI policy through wage … posting. There is endogenous assortative matching as a result of the fact that UI policy induces a time profile for … skewness. -- productivity ; heterogeneity ; UI policy ; endogenous assortative matching ; search …