The purpose of this chapter is twofold. First, it reviews the model of search and matching equilibrium and derives the properties of employment and unemployment equilibrium. Second, it applies the model to the study of employment fluctuations and to the explanation of differences in unemployment...

In Lentz and Mortensen (2005) we formulate and estimate a market equilibrium model of endogenous growth through product innovation in the spirit of Klette and Kortum (2004). In this paper, we provide a quantitative solution to the planner’s problem in the modeled environment. We find that...

The purpose of this paper is to develop a framework that allows one to distinguish between the extent to which differences in firm productivity are intrinsic and the proposition that higher paying firms employ more able workers. For this purpose, we adapt the equilibrium stochastic model of firm...

The role of passive labor market policy as a possible reason for the run up in relative unemployment rates in Europe in the 1980s has been extensively studied. More recently the focus have shifted to lagging growth rates in Europe. The Lisbon strategy reflects these concerns by calling for...

Productivity dispersion across firms is large and persistent, and worker reallocation among firms is an important source of productivity growth. The purpose of the paper is to estimate the structure of an equilibrium model of growth through innovation that explains these facts. The model is a...

Estimates of the structural parameters of a job separation model derived from the theory of on-the-job search are reported in this paper. Given that each employer pays the same wage to observably equivalent workers but wages are dispersed across employers, the theory implies that an employer's...