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In estimating matching functions by using aggregate time series data, an implicit assumption is imposed that search efficiencies are common to all regions in a country. This paper estimates the matching function using annual panel data covering 47 Japanese prefectures from 1972 to 1999, which allows variation of matching efficiencies over regions. We find that the matching function exhibits mildly...
In this paper, we demonstrate that sorting considerations alone generate steep wage-tenure profiles, high turnover rates of newly hired workers, an increase in the variance of wages with seniority, and mandatory retirement rules. We show that `excessive monitoring' is sometimes necessary to deter applications from low productivity workers. We derive conditions under which firms randomly test workers,...
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