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, which like the o164。 er arrival rate could be taken parametrically by the individual. More generally, however, ending an employment relationship should be endogenous and can depend on, for exam ple, what one learns about the quality of the relationship after it begins, how the productivity of the relationship evolves, and the outside opportunities with which the two parties e in contact. The searchtheoretic approach is ideally suited to analyze partnership dissolution and formation. Of course, this is relevant in a wide variety of contexts, but the labor market is certainly one area in which the creation and destruction of longterm (employment) relationships is absolutely central. For example, we examine the extent to which these outes are e162。 cient. In what follows we will present the singleagent search problem and 4 dis cuss all of the equilibrium issues raised in these introductory remarks, includ while standard p etitive theor y says nothing about what happens at any pr ices except equilibrium (market clearing) prices. In the languag e of game t heory, search models specify what happen s o164。 the equilibr ium pat h. Now, one can analyze sta ndard markets with … xed wages or prices – as one does, ., af ter intr oducing minimum wage laws or rent contr ol – if we also introduce so me r ationing scheme to determine what solves the allocation problem when the price mechanism cannot. Any such scheme is bound to b e ad hoc in the co ntext of a petitive equilibrium mod el. By contrast, i n search theory r ationing is done explicitly by time – indeed, this is what search t heor y is all about. ing endogenizing the wage distribution, determining o164。 er arrival rates, job destruction rates, and so on. Where appropriate we also pare the predic tions with those of standard petitive theory. However, we emphasize at the outset that while search models are richer along some dimensions than standard supply and demand models, they are not necessarily inconsistent. One often hears (and teaches) that the market clearing allocations and prices of standard theory are meant to be approximations to a real world that is actually full of frictions of one form or another, but models that abstract from these frictions may well be accurate or useful approximations depend ing on the nature of the question one at hand. While ultimately it may be an empirical question, there is also value in studying this theoretically. Once we write down a model with explicit frictions, we can let these frictions bee small and see the extent to which the limiting case resembles the petitive oute. Before getting into the pap er, we should emphasize that search theory constitutes a huge, virtually overwhelming, branch of economics. In addition to labor markets, it has been applied in a great many areas in both micro and macroeconomics, including moary theory, industrial anization, growth, public … nance, and the economics of the marriage market, to name a few, all of which we must neglect lest this survey ends up Search has been used in much fairly technical theoretical work, and has been a genuine workhorse in empirical economics, but we can neither delve 5 into pure theory nor can we pay appropriate attention to all of the econometric issues and empirical results Our focus is almost exclusively on using search models to help us anize our thinking ab out labor markets. The discussion is meant to be relatively rigorous, but we want to emphasize applications and issues as much as we can, without going into actual quantitative analysis, which is beyond the scope of the pap er. Moreover, as pared to some other branches of economics, search the 2 A few examples in moary theor y include K iyotakiWright (1989, 1993), S hi (1995) and TrejosWrig ht (1995)。 exa mples i n the marriag e market includ e M ort ensen (1988), BurdettColes (1997, 1999) and Shimer Smith (2020a)。 exam ples i n industrial anization include Jova novic (1982) , Jova no vicMacD onald (1994), JovanovicRob (1989), Klemp erer (19xx), and FishmanRob (2020). 3 Two examples of theor et ical work are RubinsteinWolins ky (1987) and Gale (1987), which are par ticularly worth mentioning because they ar e directly concer ned with t he questio n of whether mod els with frict ions converg e to petitive outes as the fric tions va nish. See DevineK iefer (1991) and Wolpin (1995) for surveys of t he empirical applications. ory is relatively young, and so there does not exist anything close to a de… ni tive treatise or standard textbook to which one can appeal for basic notation, techniques, or results. Therefore we will take time to develop somewhat care fully a few of these things in a way that will b e useful in a variety of contexts. The approach throughout the applications will be to start with simple mod els and gradually add features that seem interesting in the context of data, policy, or other substantive issues. The di164。 erent models are meant to be di164。 erent applications of the same set of tools – really, of the same model. Our goal is that, with a little work, the reader should feel at the end of this article like search theory is a general and broadly applicable paradigm for anizing our thinking ab out labor markets in particular, and about eco nomics generally, and our hope is that this will stimulate even more learning and research in this fertile area. The rest of the article is anized as follows. Section 2 presents the basic singleagent search problem in a variety of di164。 erent forms, with an eye 6 especially towards the extensions that are most relevant for the equilibrium analysis to follow. Section 3 focuses on the endogenous determination of the wage distribu。
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