@article{c42076e558ca4697b139b782603e7db9,
title = "A three state model of worker flows in general equilibrium",
abstract = "We develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin. The model is a standard version of the neoclassical growth model with indivisible labor and idiosyncratic productivity shocks and frictions characterized by employment loss and employment opportunity arrival shocks. We argue that it is able to account for the key features of observed labor market flows for reasonable parameter values. Persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories.",
keywords = "Labor market frictions, Labor supply",
author = "Per Krusell and Toshihiko Mukoyama and Richard Rogerson and Ay{\c s}eg{\"u}l {\c S}ahin",
note = "Funding Information: ✩ Much of the material in this paper was previously contained in our paper entitled “Labor Supply in a Frictional Labor Market”. We thank Ramon Marimon (editor), Nicola Pavoni, Naoki Shintoyo and four anonymous referees for useful comments, as well as seminar participants at CEMFI, Columbia, Universitat Autonoma de Barcelona, USC, UCLA, the Atlanta Fed, Yale, UC Riverside, Queen{\textquoteright}s, Georgetown, Wharton, Toronto, Ryerson, Western Ontario, Stockholm School of Economics, IIES, University of Oslo, Concordia, Northern Illinois, Yonsei University, Korea University, Ohio State, Notre Dame, Penn State, Indiana, Maryland, George Washington, as well as conference participants at the Labor Markets Conference at the IFS (2008), the Winter Institute of Macroeconomics 2009 (Tokyo), the Bewley Conference at UT Austin, and the 2009 SED Conference. We thank Joe Song for excellent research assistance. Krusell thanks the NSF for financial support, Mukoyama thanks the Bankard Fund for Political Economy for financial support, and Rogerson thanks the NSF and the Korean Science Foundation (WCU-R33-10005) for financial support. The views expressed in this article are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.",
year = "2011",
month = may,
doi = "10.1016/j.jet.2010.09.003",
language = "English (US)",
volume = "146",
pages = "1107--1133",
journal = "Journal of Economic Theory",
issn = "0022-0531",
publisher = "Academic Press Inc.",
number = "3",
}