Abstract :
Empirical studies of the aggregate labor market matching function have favored
a Cobb–Douglas functional form, for which there are no microfoundations
in the existing literature. I present a new model for the matching process, based on
a “telephone-line” Poisson queuing process, which, unlike other microeconomic
approaches, can be integrated directly into standard theoretical search models.
This implies aCESmatching function, approximately Cobb–Douglaswhensearch
costs are approximately linear. The model allows empirical estimates of matching
function parameters to be interpreted in terms of the costs and benefits of search.
