Date of Award
Doctor of Philosophy (PhD)
This dissertation consists of three chapters that examine search frictions within the macroeconomy. In the first chapter, I construct a model of simultaneous search to propose a novel contributor to the twin effects of labor force participation decline and rising wage inequality. An algorithm for solving the pairwise-stable matching in a macro environment is provided and incorporated into a dynamic, general equilibrium model. Falling search costs will generate falling labor force participation—as the lowest ranked workers are crowded out of the market—and rising wage inequality—as the competition for desired skills increases. An empirical tests corroborates the effects of cheap search on falling participation.
Chapter 2 assesses the contribution of aggregate vs. sectoral shocks to output volatility by building a real business cycle model calibrated to match realistic structure in the market for all three major inputs to production---material inputs, capital goods and labor. While the former two inputs are standard, this paper innovates on previous methods by first expounding the structure of sectoral labor reallocation and then calibrating a model to match its features. A common-factor estimation procedure attributes approximately half of aggregate output volatility to sectoral shocks.
In Chapter 3, I explore the implications of lower search costs for product markets by building a micro-founded model of shopping within an industry that features realistic product search frictions. I show via a precise characterization that either increasing or decreasing prices in response to cheaper search can be consistent with competitive equilibrium, depending on the distribution of consumer tastes. This distribution-dependence further dictates whether firms and varieties enter or exit the marketplace.
Hursey, Timothy, "Essays On Search" (2019). Publicly Accessible Penn Dissertations. 3222.