Directed search over the life cycle

Guido Menzio, Irina A. Telyukova, Lodewijk Visschers

Research output: Contribution to journalArticlepeer-review


We develop a life-cycle model of the labor market in which different worker–firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it predicts quite well the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition rates, wages and productivity into the effects of age variation in work-life expectancy, human capital and match quality.
Original languageEnglish
Pages (from-to)38-62
JournalReview of Economic Dynamics
Early online date6 Mar 2015
Publication statusPublished - 30 Jan 2016


  • directed search
  • labor reallocation
  • lifecycle


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