Topic:Misallocation Effects of Labor Market Frictions
Speaker:Stanislav Rabinovich,UNC Chapel Hill
Time:Friday, June 21, 13:30-15:00p.m
Place:Room 217, Guanghua Building2
We ask whether,and in what respect, labor market frictions lead to misallocation of workers across firms. We answer this question in a heterogeneous- firm model with imperfectly directed search. Some workers can direct their search, while others are uninformed about the location of wage offers ex ante and are assigned to job openings randomly. In equilibrium, high-productivity firms attract both types of workers, whereas low-productivity firms forego attracting directed searchers so as to extract surplus from the random searchers. Relative to the social optimum, too many firms take advantage of their market power and attract only random searchers, inducing all the directed searchers to concentrate at high-productivity firms. This results in a misallocation of labor away from the middle and toward the top of the productivity distribution. An appropriately chosen minimum wage raises employment and welfare.
Stan Rabinovich received his Ph.D. in economics from the University of Pennsylvania in 2012. He is currently Assistant Professor of Economics at UNC Chapel Hill. His interests are in search and matching theory and the macroeconomics of labor markets. His research focused on the effects of unemployment insurance on unemployment persistence and the optimal design of unemployment insurance over the business cycle. He has also written papers on search and bargaining in asset markets, price dispersion, and multiplicity of equilibria in search models of money. His current research concerns the analysis of models that combine random and directed search.
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