TY - JOUR
T1 - Unstable relationships
AU - Burdett, Kenneth
AU - Imai, Ryoichi
AU - Wright, Randall
N1 - Funding Information:
We thank seminar participants at Arizona State, Essex, Teaxs-Austin, McGill, Toronto, Kyoto, Waseda, Yokohama, the Federal Reserve Banks of Minneapolis and Cleveland, the Japanese Economics Association, the Kansai Labor Economics Conference, the Southeastern Economic Theory Meetings, the New York Area Macro Workshop, the Canadian Macro Study Group, and the NBER. We also thank the referees, R. Shimer, D. Andolfatto, G. Barlevy, G. Eudey, J. Kennan, I. King, D. Mortensen, G. Moscarini, and T. Cornelius, nee Webb. The NSF provided financial support.
PY - 2004
Y1 - 2004
N2 - We analyze models where agents search for partners to form relationships (employment, marriage, etc.), and may or may not continue searching for different partners while matched. Matched agents are less inclined to search if their match yields more utility, and also if it is more stable. If one partner searches the relationship is less stable, so the other is more inclined to search, potentially making instability a self-fulfilling prophecy. We show this can generate multiple - indeed, a continuum of - equilibria. We investigate efficiency and show that in any equilibrium there tends to be too much turnover, unemployment, and inequality. We calibrate an example to see how well the model can account for job-to-job transitions, and to see how much endogenous instability matters.
AB - We analyze models where agents search for partners to form relationships (employment, marriage, etc.), and may or may not continue searching for different partners while matched. Matched agents are less inclined to search if their match yields more utility, and also if it is more stable. If one partner searches the relationship is less stable, so the other is more inclined to search, potentially making instability a self-fulfilling prophecy. We show this can generate multiple - indeed, a continuum of - equilibria. We investigate efficiency and show that in any equilibrium there tends to be too much turnover, unemployment, and inequality. We calibrate an example to see how well the model can account for job-to-job transitions, and to see how much endogenous instability matters.
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U2 - 10.2202/1534-6021.1102
DO - 10.2202/1534-6021.1102
M3 - Article
AN - SCOPUS:4544330954
SN - 1534-6021
VL - 1
JO - Frontiers of Macroeconomics
JF - Frontiers of Macroeconomics
IS - 1
ER -
