Eric Smith | University of Essex (original) (raw)

Papers by Eric Smith

This paper assesses the trade-off between acquiring specialized skills targeted for a particular ... more This paper assesses the trade-off between acquiring specialized skills targeted for a particular occupation and acquiring a package of skills that diversifies risk across occupations. Individual-level data on college credits across subjects and labor market dynamics reveal that diversification generates higher income for individuals who switch occupations whereas specialization benefits those who stick with one type of job. A human capital portfolio choice problem featuring skills, abilities, and uncertain labor outcomes replicates this general pattern and generates a sizable amount of inequality. Policy experiments illustrate that forced specialization generates lower average income growth and lower turnover, but also lower inequality.

PRELIMMINARY 2 Stock-flow also allows traders to submit multiple job applications as in who consi... more PRELIMMINARY 2 Stock-flow also allows traders to submit multiple job applications as in who consider a directed search model with multiple applications by job seekers.

This paper investigates job matching patterns in Great Britain. Evidence from individual transiti... more This paper investigates job matching patterns in Great Britain. Evidence from individual transitions out of unemployment demonstrates that recently unemployed workers are likely to find jobs in the existing stock of vacancies. If, however, they are unlucky and fail to match early on, job seekers cease matching with existing vacancies. Workers with longer unemployment spells instead form matches with the flow of new vacancies. This pattern is more pronounced for workers who experienced only short spells of employment prior to their current job search. This evidence provides robust support for stock-flow matching but is difficult to reconcile with random matching.

We construct a simple equilibrium search model in which workers accumulate information about prev... more We construct a simple equilibrium search model in which workers accumulate information about previously met employment contacts. We term the latter search capital. Here search capital (partially) insures workers against adverse shocks. The model provides a theory of job-to-job transitions that are associated with voluntary or involuntary mobility and with wage rises or wage cuts. It also shows why low wage and younger workers are associated with a higher probability of becoming unemployed.

This paper incorporates assignment frictions and sector specific training into the Roy model of o... more This paper incorporates assignment frictions and sector specific training into the Roy model of occupational choice. Assignment frictions represent the extent of the market whereas differences in sector specific training reflect worker specialization. This framework thus captures Adam Smith's idea that the extent of the market determines the division of labor. The paper demonstrates the way in which the relationship between assignment frictions and specialization affects the level and composition of human capital acquisition, aggregate output and the distribution of income. Not surprisingly, economywide training, output and specialization all increase as the extent of the market increases. The distribution of these gains, however, is uneven. Within group or residual income distribution does not converge monotonically as search frictions diminish. Comparisons across groups reveal that these effects can become more pronounced as average income increases.

* This paper examines wage dispersion and wage dynamics in a stock-flow matching economy with on-... more * This paper examines wage dispersion and wage dynamics in a stock-flow matching economy with on-the-job search. Under stock-flow matching, job seekers immediately become fully informed about the stock of viable vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. The initial and expected threat of competition determines the evolution of wages and thereby introduces a novel way of understanding wage differences among similar workers. The resulting wage distribution has an interior mode and prominent, well-behaved tails. The model also generates job-to-job transitions with both wage cuts and jumps.

International Economic Review, Jan 1, 1998

This paper models trading patterns when marketplaces exist and goods are differentiated. When fir... more This paper models trading patterns when marketplaces exist and goods are differentiated. When first visiting the market, a buyer samples a stock of goods. If fortunate, the buyer finds a match, purchases one of these goods and then exits. If not, the buyer can now only match ...

Economica, Jan 1, 1996

This paper anialyses how the levels of unemployment and vacancies affect the rate at which uniemp... more This paper anialyses how the levels of unemployment and vacancies affect the rate at which uniemployed workers finid employment the worker-firm &amp;amp;amp;#x27;matching function&amp;amp;amp;#x27;. In particular, we test the robustness of previous empirical work by checking whether we obtain the same ...

European Economic Review, Jan 1, 2002

Recently, it has become popular to argue that certain workers have fallen into a trap in which th... more Recently, it has become popular to argue that certain workers have fallen into a trap in which they have poor skills, few job opportunities and a low return on training, while others have not. This paper demonstrates how such a trap can occur within a simple matching model ...

Oxford Economic Papers, Jan 1, 1996

LONG-STANDING customers or workers often receive favourable treatment. London's Royal Op... more LONG-STANDING customers or workers often receive favourable treatment. London's Royal Opera House has a season subscription plan which not only offers an understandable discount off single ticket prices but, more interestingly, gives long-standing subscribers preferential ...

Review of Economic Dynamics, Jan 1, 2007

University of Essex. Mimeo, Jan 1, 1999

Review of Economic Dynamics, Jan 1, 1999

This paper demonstrates that in a free entry search and bargaining economy with concave productio... more This paper demonstrates that in a free entry search and bargaining economy with concave production firms over-employ. Bargaining allows the worker&amp;#x27;s wage to depend upon marginal productivity. As such, with strictly concave production, the wage declines as firms employ ...