UC Riverside

The dissertation explores the inter-dependence between agents' educational choices and their labor market outcomes. This individual level of inter-relationship is aggregated under a search and matching framework to analyze the cyclical and long-run labor market behaviors. The dissertation argues that the high volatility of labor market can be attributed to complementarity between high-skill and low-skill workers, as well as the economies of scale of job training for high-skill labor. Then, the dissertation combines a search and matching model with a signaling game to explain agents' educational choices and the unemployment rate gap between educated and uneducated workers. It also discusses some indirect effects of education and labor market policies. The effect of skill-biased technological change is scrutinized as well. An extension of this model is then used to analyze the growing mismatch of skill in China.