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Federal Reserve Bank of Cleveland
Working Papers (New Series)
Job Heterogeneity and Aggregate Labor Market Fluctuations
Pawel Krolikowski

This paper disciplines a model with search over match quality using microeconomic evidence on worker mobility patterns and wage dynamics. In addition to capturing these individual data, the model provides an explanation for aggregate labor market patterns. Poor match quality among first jobs implies large fluctuations in unemployment due to a responsive job destruction margin. Endogenous job destruction generates a burst of layoffs at the onset of a recession and, together with on-the-job search, generates a negative comovement between unemployment and vacancies. A significant job ladder, consistent with the empirical wage dispersion, provides ample scope for the propagation of vacancies and unemployment.

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Pawel Krolikowski, Job Heterogeneity and Aggregate Labor Market Fluctuations, Federal Reserve Bank of Cleveland, Working Papers (New Series) 190400, 01 Feb 2019.
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Keywords: Unemployment; job destruction; amplification; match-quality
DOI: 10.26509/frbc-wp-201904
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