@TechReport{iza:izadps:dp886, author={Dolado, Juan J. and Jansen, Marcel and Jimeno, Juan F.}, title={On-the-Job Search in a Matching Model with Heterogenous Jobs and Workers}, year={2003}, month={Oct}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={886}, url={https://www.iza.org/index.php/publications/dp886}, abstract={This paper considers a matching model with heterogenous jobs (unskilled and skilled) and workers (low and high-educated) which allows for on-the-job search by mismatched workers. The latter are high-educated workers who transitorily accept unskilled jobs and continue to search for skilled jobs. Our findings show that on-the-job search introduces an additional source of between and within-group wage inequality. Furthermore, the higher quit rate of mismatched workers exerts a negative externality on unskilled jobs and weakens the labour market position of low-educated workers. This last feature changes the effects of skill-biased technological change and it alters the response of the labour market to shifts in the skill distribution.}, keywords={skills;job search;wage inequality;unemployment}, }