Efficiency and labor market dynamics in a model of labor selection

Sanjay K. Chugh; Christian Merkl

This paper characterizes efficient labor-market allocations in a labor selection model. The model's crucial aspect is cross-sectional heterogeneity for new job contacts, which leads to an endogenous selection threshold for new hires. With cross-sectional dispersion calibrated to microeconomic data, 40 percent of empirically-relevant fluctuations in the job-finding rate arise, which contrasts with results in an efficient search and matching economy. The efficient selection model's results hold in partial and general equilibrium, as well as with sequential search.

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Year of publication:	2015 ; First draft: September 2010, This draft: August 9, 2015
Authors:	Chugh, Sanjay K. ; Merkl, Christian
Publisher:	München : CESifo
Subject:	labor market frictions \| hiring costs \| sequential search \| efficiency \| amplification \| Suchtheorie \| Search theory \| Personalbeschaffung \| Recruitment \| Arbeitsmarkt \| Labour market \| Arbeitsmarkttheorie \| Labour market theory \| Arbeitsnachfrage \| Labor demand \| Allokationseffizienz \| Allocative efficiency \| Personalauswahl \| Personnel selection \| Arbeitsuche \| Job search \| Konjunktur \| Business cycle \| Matching \| Dynamisches Gleichgewicht \| Dynamic equilibrium