An Equilibrium Search Model With Endogenous Growth Rate Of Human Capital

The unsymmetrical distribution between job opportunities and labor re-sources makes the real labor market diferent from other markets. In the labormarket, workers hope to find an ideal job in the shortest time, while firms ex-pect to maximize their profits through ofering suitable wage. Job search theorydeveloped in the1960s has been an important theory in the labor market whichis full of uncertainty and information completeness.Discuss an equilibrium search model in which jobs provided by firms canbe either unskilled or skilled while workers difer in their education levels whichcan be either low-educated or high-educated. The high-educated workers areassumed to be able to accept either the unskilled jobs or the skilled jobs, whilethe low-educated workers can only accept the unskilled jobs. Allowing humancapital accumulation, on-the-job search, job destruction shock and death shock,we set up job search models and put forward the optimal search strategies basedon the optimality principle. The structure proportion of the ofered jobs afectsthe equilibrium which shows there is a threshold that can distinguish whetherthe equilibrium is either separating or cross-skill. In addition, the cross-skillequilibrium solution implies the high-educated workers are more likely to ownhigher pay rates than the low-educated workers with the same tenure. It alsoyields a new insight on the efect of the structure proportion of workers on theprofits, which implies the profits of the firms decrease with the increasing numberof the low-educated workers. Moreover, the profits of the firms ofering the skilledjobs are greater than those ofering the unskilled jobs until there is only very fewhigh-educated workers.