We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and … unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of … fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion …

We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and … unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of … fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion …

, display significant sensitivity of wages to business cycle conditions and last longer …