Question
Search and unemployment economy. Unemployment rate is u = 1 - em(1,j). Matching function : M=eQ a A 1-a , a is between 0 &
Search and unemployment economy.
Unemployment rate is u = 1 - em(1,j).
Matching function : M=eQaA1-a, a is between 0 & 1, and e is positive. The function is CRS (a + (1-a) = 1)
Given market tightness, j=A/Q
Find unemployment rate as a function of market tightness. Is it increasing/decreasing to market tightness
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Macroeconomics
Authors: Robert J Gordon
12th edition
138014914, 978-0138014919
