Many markets feature sequentially mixed search (SMS), which has directed search followed by noisy matching with multiple offers. I construct a simple model of SMS, establish existence of a unique equilibrium, and analyze the novel implications of the equilibrium on quantities and price...

To answer the question in the title, this paper characterizes the socially efficient organization of the market with search frictions. The efficient organization depends on the relative elasticity in the supply between the two sides of the market, the costs of participating in the market and...

Capital reallocation is procyclical and dispersion in Tobin's q across firms is counter-cyclical or acyclical. These facts run counter to the Schumpeterian view of capital reallocation embodied in modern theories of business cycles. To resolve the puzzles, we model an economy with search...

We incorporate emission into a general equilibrium model with rich dispersion in productivity among monopolistically competitive plants. Emission is modeled as a by-product from goods production. An abatement technology is available to the plants for reducing emission. We compare an emission tax...

By integrating frictional sorting into the neoclassical framework with post-match investment by firms, this paper analyzes the social optimum and the equilibrium. A main theoretical result is that post-match investment restores positive assortative matching (PAM) to the social optimum in the...

We study a directed search equilibrium with risk-averse workers who can search on the job and accumulate non-contingent assets under a borrowing limit. Search outcomes affect earnings and wealth accumulation. In turn, wealth and earnings affect search decisions by changing the optimal trade-off...

Using data from the Census, ACS and the CPS, we document that a large part of long-run reallocation of labor from the goods to the service sector took place within narrowly defined groups of workers. In particular, sectoral reallocation reflects a labor market trend that is distinct from the...

When there are search frictions in the labor market, physical capital accumulation by firms interacts with job dynamics. To study this interaction, this paper integrates directed, on-the-job search (OJS) into the neoclassical theory of firm investments, analytically characterizes the social...

In this paper, we develop a general stochastic model of directed search on the job. Like in the analogous models of random search on the job, the state of the economy in our model includes the infinite-dimensional distribution of workers across different employment states (unemployment, and...

We build a directed search model of the labor market in which workers' transitions between unemployment, employment, and across employers are endogenous. We prove the existence, uniqueness and efficiency of a recursive equilibrium with the property that the distribution of workers across...