Abstract
This paper surveys recent work in the area of labor market search and dynamic macroeconomics. It links new developments to the theory’s origin, thereby illustrating and critically examining the progress that has been made in terms of studying macroeconomic issues. Labor market search has been used increasingly more often to study the welfare implications of unemployment insurance, or the dynamic effects of labor market policies such as factor taxation, or hiring subsidies. The issues dealt with tend to be familiar, but the methodology applied to them is generally new. The development of tractable dynamic general equilibrium models encompassing many markets has allowed researchers to integrate elements of labor market search into a broader model. This allows them to study the dynamic interaction between the labor market and other markets of the economy. Advances made in developing solution procedures that can handle large state spaces, and a remarkable increase in computing power have spurred the recent development.
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Merz, M. (2002). Search Theory Rediscovered: Recent Developments in the Macroeconomics of the Labor Market. In: Woodbury, S.A., Davidson, C. (eds) Search Theory and Unemployment. Recent Economic Thought Series, vol 76. Springer, Dordrecht. https://doi.org/10.1007/978-94-010-0235-6_2
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DOI: https://doi.org/10.1007/978-94-010-0235-6_2
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