Learning about labor markets

Bradley, Jake; Mann, Lukas

Abstract

We study a general equilibrium model of the labor market in which agents slowly learn about their suitability for jobs. Our model reproduces desirable features of the data, many of which standard models fail to replicate. We explore how, in such an environment, asymmetric information can lead to substantial misallocation. We calibrate our model to US data and quantify the welfare loss arising from misallocation due to informational frictions. The tractability of the model allows us to explore the responsiveness of wages and employment to an aggregate shock. We find that wage rigidity arises endogenously because of protracted learning, and in line with the data, the model is able to generate a larger and more persistent employment response.

Citation

Bradley, J., & Mann, L. (2024). Learning about labor markets. Journal of Monetary Economics, 148, Article 103612. https://doi.org/10.1016/j.jmoneco.2024.103612

• Journal Article Type: Article
• Acceptance Date: May 20, 2024
• Online Publication Date: May 22, 2024
• Publication Date: 2024-11
• Deposit Date: Feb 17, 2025
• Publicly Available Date: Feb 17, 2025
• Journal: Journal of Monetary Economics
• Print ISSN: 0304-3932
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 148
• Article Number: 103612
• DOI: https://doi.org/10.1016/j.jmoneco.2024.103612
• Public URL: https://nottingham-repository.worktribe.com/output/35425796
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0304393224000655?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Learning about labor markets; Journal Title: Journal of Monetary Economics; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jmoneco.2024.103612; Content Type: article; Copyright: © 2024 The Author(s). Published by Elsevier B.V.