A New Model of Labor Market Dynamics

Abstract

This paper introduces a new type of models of labor market dynamics with heterogenous workers in sectors of economy in analyzing stochastic events of job creations and destructions. Differences in job experiences and human captials are measured by ultrametrics which influence the stochastic processes of posted vacancies being filled. The phenomena of.job creations and destructions are endogenized by using excess demands as proxies for profitabilities of sectors of economy.