Job Competition over the Business Cycle

My thesis explores the following question: how workers of different skill are allocated across jobs and unemployment over the business cycle. I am interested in understanding the “over-qualification” of workers that occurs during periods of high unemployment, as increased congestion in the labor market hinders workers from finding a suitable match. I focus on the skill mismatch that takes the form of high-skilled workers transitorily accepting low-skill jobs, thereby influencing the labor market prospects of low-skilled workers. In the first chapter, I develop a business cycle matching model with heterogeneous workers and jobs, which helps understand the role of over-qualification on labor productivity and across-skill unemployment dynamics. I capture the across-skill search externalities and spillover effects that arise when low- and high-skilled workers compete for low-skill jobs, by relaxing the common assumption that all workers qualify for any type of vacancy. I show that the…

Author: Chasamboulli, Andri N.

Source: University of Maryland

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1 Job Competition Over the Business Cycle: Implications for Labor Produc-tivity and Unemployment Rates by Skill
1.1 Introduction
1.2 Related Literature
1.3 The Model
1.3.1 Main Assumptions
1.3.2 Bargaining
1.3.3 Timing and Flow Equations
1.3.4 Asset Values
1.3.5 Surpluses and Zero Profit Conditions
1.3.6 Equilibrium
1.4 Simulations
1.4.1 Aggregate Productivity Fluctuations
1.4.2 Job Separation Fluctuations
1.5 Conclusion
2 Cyclical Variation in Match Quality: The Role of Unemployment Risk
2.1 Introduction
2.2 Data
2.3 Mismatch Rates Over the Business Cycle
2.4 Linear Probability and Logit Models
2.4.1 The Effect of Business Cycle and Education on High- Job-Level Probability
2.4.2 The Effect of Business Cycle and Education on Low- Job-LevelProbability
2.5 Dynamic Panel Data Models
2.5.1 Are Unemployed High-Skilled Workers More Likely to TakeLow-Skill Jobs in Recessions?
2.5.2 Are Unemployed High-Skilled Workers Less Likely to TakeHigh-Skill Jobs in Recessions?
2.5.3 Are Mismatched High-Skilled More Likely to Take High-SkillJobs in Booms?
2.6 Markov Chain Multinomial Logit Model of Job level Transitions
2.6.1 The Model
2.6.2 Conditional Maximum Likelihood Estimation
2.6.3 Results
2.7 Conclusion
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