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Working Paper
The Dual Beveridge Curve
This study introduces a dual vacancy model to explain the recent anomalous behavior of the Beveridge curve. The model proposes that job vacancies are partitioned into two categories, one for the unemployed and the other for job-to-job transitions, and that they function in separate markets. We estimate the monthly numbers of both job vacancy types for the U.S. economy and its subsectors starting from 2000 and find a significant surge in poaching vacancies in the mid-2010s. Our analysis indicates that the dual vacancy model provides a better fit to the data than traditional models. These ...
Marrying for Money Ends Up Reducing Income Inequality
The marriage market constitutes a way to ameliorate income inequality in the U.S. and to create bridges across the income ladder.
Working Paper
Wage Setting Under Targeted Search
When setting initial compensation, some firms set a fixed, non-negotiable wage while others bargain. In this paper we propose a parsimonious search and matching model with two sided heterogeneity, where the choice of wage-setting protocol, wages, search intensity, and degree of randomness in matching are endogenous. We find that posting and bargaining coexist as wage-setting protocols if there is sufficient heterogeneity in match quality, search costs, or market tightness and that labor market tightness and relative costs of search play a key role in the choice of the wage-setting mechanism. ...
Discussion Paper
Estimating the output gap in real time
I propose a novel method of estimating the potential level of U.S. GDP in real time. The proposed wage-based measure of economic potential remains virtually unchanged when new data are released. The distance between current and potential output ? the output gap ? satisfies Okun?s law and outperforms many other measures of slack in forecasting inflation. Thus, I provide a robust statistical tool useful for understanding current economic conditions and guiding policymaking.
Working Paper
The Dual Beveridge Curve
This study introduces a dual vacancy model to explain the recent anomalous behavior of the Beveridge curve. The model proposes that job vacancies are partitioned into two categories, one for the unemployed and the other for job-to-job transitions, and that they function in separate markets. We estimate the monthly numbers of both job vacancy types for the U.S. economy and its subsectors starting from 2000 and find a significant surge in poaching vacancies in the mid-2010s. Our analysis indicates that the dual vacancy model provides a better fit to the data than traditional models. These ...
Working Paper
Targeted Search in Matching Markets
We propose a parsimonious matching model where a person's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences?vertical versus horizontal?and that this interaction implies that preferences recovered using our model can look markedly different from those recovered using a model where the degree of ...
Economics of Love: Rejection Worth Chance at Dream Date
With the advance of social networks and increasing prevalence of online dating, the question of how men and women match up has gained importance in economics and society.
Journal Article
Long view of China suggests inevitable slowdown
Market reforms account for almost half of China?s growth miracle since 1978. However, the pace of expansion is bound to slow down as China approaches the technological frontier.
Working Paper
Asymmetric firm dynamics under rational inattention
We study the link between business failures, markups and business cycle asymmetry in the U.S. economy with a model of optimal firm exit under rational inattention. We show that the model's predictions of lagged, counter-cyclical and positively skewed markups together with counter-cyclical exit rates are consistent with the empirical evidence. Moreover, our model uncovers a new mechanism that links information processing with the business cycle. It predicts counter-cyclical attention to economic conditions consistent with survey evidence.
Working Paper
Wage Setting Under Targeted Search
When setting initial compensation, some firms set a fixed, non-negotiable wage while others bargain. In this paper we propose a parsimonious search and matching model with two sided heterogeneity, where the choice of wage-setting protocol, wages, search intensity, and degree of randomness in matching are endogenous. We find that posting and bargaining coexist as wage-setting protocols if there is sufficient heterogeneity in match quality, search costs, or market tightness and that labor market tightness and relative costs of search play a key role in the choice of the wage-setting mechanism. ...