Essays on Search and Matching Theory

The first chapter studies the role of search frictions and preference shocks and how they lead to sorting heterogeneous agents in the labor market. I develop a stochastic sorting framework where the equilibrium exhibits sorting across types. This feature helps to understand empirical labor market trends, such as mismatch and wage inequality. In particular, I find that differences in productivity, entry cost, market noise, and unemployment benefits have contributed to changes in observed sorting patterns and income inequality in the U.S. labor market.In the second chapter, I examine the role of various skill levels in a frictional labor market with heterogeneous workers and firms. The economy consists of workers with different skill levels and firms with diverse skill requirements for job vacancies. By assumption, workers qualify for jobs with lower skill requirements, though productivity is lower due to mismatch. In the model, workers may or may not choose to match firms with lower job skill requirements. This has implications on equilibrium unemployment, wage inequality, and the optimal mix of job openings.The third chapter studies the decision-making behavior of agents who are simultaneously searching in dual markets, namely the labor market and the marriage market. When considering the marriage decision in the single agent labor search model, I find that individual searchers have similar reservation wage behavior that affects wage dynamics and marriage outcomes under risk-neutral preferences