311524 CUDE Cluster Group B: Reading Group on Search and Matching Theory (S) (SoSe 2024)

In modern labour economics search frictions are considered to be an important source of equilibrium unemployment. The idea behind search frictions suggests that locating a job is a time-consuming process for workers requiring search effort. Also for firms search frictions imply that finding an appropriate applicant is associated with hiring costs and time-investment. Looking beyond time and effort, another difficulty of the search process is a two-sided heterogeneity of workers and firms underlying acceptance and rejection decisions. That is even if the worker and the firm are matched together, there is no guarantee that they are suitable for each other, as worker's qualification and skills could be insufficient for the job, in the same way, it could happen that some job characteristics are not acceptable for the worker. Furthermore, even if the match is mutually acceptable at the start of the employment relationship, this situation could quickly change in dynamic economic environments leading to a separation, which could be voluntary and associated with a new better job for the worker, or involuntary and associated with a new spell of unemployment. These mechanisms, requiring optimal decision-making of workers and firms in uncertain labour market environments, are at the heart of search and matching theory. For more details, please, see the Syllabus in the Lernraum.

For Master students this course counts as Part I of the Labour Economics class 312213, the final grade can be obtained after Part II of the class in Winter semester 2024/25