Essays in search theory and macroeconomics

This thesis consists of three chapters on frictional labor markets. The first chapter extends a search matching model so that the model says something about the incidence of bonus pay, which is empirically inversely related to unemployment rates across labor markets. This extension serves the purpose of giving disciplines to guide research on empirical difficulties of textbook search and matching models in delivering the large impact of productivity changes on vacancies and unemployment. The empirical fact about bonus pay incidences implies that workers' bargaining power has to be decreasing in productivity. This alleviates the empirical difficulty of matching models.The second chapter studies a frictional labor market, in which an employer has private information about match productivity. Under a setup of take-it-or-leave-it wage offers by either worker or firm, pro-cyclical information rents for firms are generated, helping for the model to deliver large fluctuations in vacancy creation. However, under a setup in which a mechanism is selected through Nash bargaining, wages are pro-cyclical, helping little to deliver large fluctuations of vacancies.The third chapter examines both theoretical and quantitative consequences of letting education be time-consuming to model-generated human capital externalities in a frictional labor market. I find that overlooking time costs of education in calibration exercises will overstate the size of education subsidies, which internalizes the external returns to education. Consequences of letting education be time-consuming to comparative statics are also examined.