Economics & Statistics Discussion Paper

This paper modelles job search mechanism at individual level by a determinstic-stochastic approach in a economy with perfect competion and rational agents. Each single unit, firm or worker, is analyzed over time; aggregate dynamics comes directly from the micro-structure of the economy. We show that the unemployment as well as vacancy rate converge in the long run to an ergodic distribution whose average value lies on the Beverdige curve. Transitional paths are not-monotone and depending on initial conditions. The micro-model is exploited to assess the relationship between job search and social networks (neighborhood effects); results show that, when the network is endogenous, such spillovers affect both transitional paths and steady state in several way, not last in a negative way. J.E.L. J20 J23 J24