Three essays on the labor market

The first essay analyzes labor market fluctuations in a matching model with private information and on-the-job search. Shimer (2005) shows that the standard matching model cannot explain the observed volatility of unemployment and vacancy creation. This paper shows that the addition of private information and on-the-job search results in sticky wages, which generates larger fluctuations in unemployment and vacancies. However, aggregate productivity shocks alone are still not sufficient to account for the observed magnitude of unemployment fluctuations.;The second essay develops an equilibrium job search model in which workers privately accumulate human capital and search for better paying jobs. Firms offer a menu of wage-tenure contracts depending on output, in order to encourage production and discourage on-the-job search. In this environment, wages grow with job-to-job transitions, human capital accumulation and job tenure. We estimate the model to investigate the contribution of human capital accumulation in individual wage growth. In the NLSY79 data, the average wage of a white, male high school graduate after 20 years of work experience is 88% larger than his first full-time wage. According to a counterfactual analysis, his wage would grow by just 42% without any human capital accumulation.;The third essay analyzes the firm's decision of how much general training to provide in a frictional labor market with on-the-job search behavior. Newly born workers start their career as unskilled workers and become skilled through on-the-job training. Firms post a skill-dependent wage schedule and training intensity. In steady state equilibrium, training firms commit to paying their unskilled workers the entire surplus after training, choose the training intensity maximizing joint surplus, and extract surplus during the training period through lower wages. We also investigate how the training intensity varies across firms with different productivity.