Stock-Flow Matching (screen version)
(print version)
Robert Shimer (Chicago) and Ehsan Ebrahimy (Chicago)
This paper develops and quantifies the
implications of the stock-flow matching model for unemployment, job vacancies,
and worker flows. Workers and jobs are
heterogeneous, so most worker-job pairs cannot profitably match, leading to the
coexistence of unemployed workers and job vacancies. Productivity shocks cause
fluctuations in the number of active jobs, which in turn cause fluctuations in
labor market outcomes. We derive exact
expressions for employment and worker transition rates in a finite economy and
analyze their limiting behavior in a large economy. A calibrated version of the model is
consistent with the co-movement of labor market variables observed in