Labor Search and Matching

3 Credits · Level: Graduate, Undergraduate

Why do unemployed workers and unfilled vacancies co-exist? This has been a fundamental puzzle in labor and macroeconomics. In the labor market, workers search for suitable jobs and firms try to hire suitable workers. Some workers can't find a job while at the same time some vacancies remain unfilled. Is there an economic theory that can explain this fact? This course introduces students to search and matching theory, a framework that is used to describe the formation of mutually beneficial relationships over time. In particular, the way unemployed workers and job vacancies meet can be modeled as a search and matching process. Students will learn how to use the theory to answer one of the central questions of economics, namely, what determines the levels of employment and unemployment in the economy?