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The B.E. Journal of Macroeconomics

Editor-in-Chief: Abraham, Arpad / Cavalcanti, Tiago

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Variable Search Intensity with Coordination Unemployment

Leo Kaas1

1Universitaet Konstanz,

Citation Information: The B.E. Journal of Macroeconomics. Volume 10, Issue 1, ISSN (Online) 1935-1690, DOI: 10.2202/1935-1690.2162, October 2010

Publication History

Published Online:
2010-10-28

This paper analyzes an urn-ball matching model in which workers decide how intensively they sample job openings and apply at a stochastic number of suitable vacancies. The model allows for tractable equilibrium characterization with a continuous search intensity margin. Equilibrium is not constrained efficient; entry is excessive, search intensity can be too high or too low, and an inefficient discouraged-worker effect among homogenous workers emerges under adverse labor market conditions. Unlike existing coordination-friction economies with fixed search intensity, the model can account for the empirical relation between the job-finding rate and the vacancy-unemployment ratio, provided that search costs are small and that search intensity is sufficiently procyclical.

Keywords: matching function; coordination frictions; unemployment

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