TY  - RPRT
        AU  - Schulz, Bastian
        TI  - Labor Market Dynamics with Sorting
        PY  - 2023/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 16467
        UR  - https://www.iza.org/publications/dp16467
        AB  - I study a dynamic search-matching model with two-sided heterogeneity, a production complementarity that induces labor market sorting, and aggregate shocks. In response to a positive productivity shock, incentives to sort increase disproportionately. Firms respond by posting additional vacancies, and the strength of the response is increasing in firm productivity. The distribution of unemployment worker types adjusts slowly, which amplifies job creation in the short run. In the long run, falling unemployment curtails the firms' vacancy posting. The model closely matches time-series moments from U.S. labor market data and produces realistic degrees of wage dispersion and labor market sorting.
        KW  - worker heterogeneity
KW  - aggregate shocks
KW  - mismatch
KW  - sorting
KW  - matching
KW  - search
KW  - firm heterogeneity
KW  - unemployment dynamics
        ER  -