The economics of search study the implications of frictions for individual behavior and market performance, due usually to imperfect information about exchange possibilities. This article reviews labor-market research in this area. Individuals search for a job offer by choosing a reservation wage and accepting jobs that pay above that wage. Firms create jobs to maximize profit. The probability ...

We build a general equilibrium model that features uninsurable idiosyncratic shocks, search frictions and an operative labor supply choice along the extensive margin. The model is calibrated to match the average levels of gross flows across the three labor market states: employment, unemployment, and non-participation. We use it to study the implications of two kinds of aggregate shocks for the...

In main theories of monetary non-neutrality the Ramsey optimal inflation rate varies between the negative of the real interest rate and zero. This paper explores how the interaction of nominal wageand search and matching frictions affect the planners choice. We show that adding the combination of such frictions to the canonical monetary model can generate an optimal inflation that is significan...

We measure labor market frictions using a strategy that bridges design-based and structural approaches: estimating an equilibrium search model using reduced-form minimum wage elasticities identified from border discontinuities and fitted with Bayesian and LIML methods. We begin by providing the first test of U.S. minimum wage effects on labor market flows and find negative effects on employment...

Recent work has shown that in a labor market with search frictions and wage dispersion, the relationship between wages and amenities may be much di erent than in the classical compensating wage model. This paper generalizes their work, revealing the full range of potential relationships between wages and amenities possible in a labor market with frictions and clarifying the key role of the natu...

Market Imperfections and Firm-Sponsored Training Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms’ training expen...

a r t i c l e i n f o a b s t r a c t This paper considers a sticky-price model with heterogeneous households and financial frictions. Financial frictions lead to imperfect risk-sharing among households with idiosyn-cratic labor incomes. I study implications of imperfect risk-sharing for optimal monetary policy by documenting its impacts on the monetary transmission mechanism, the inflation– ou...