Thibaut Lamadon

I am a 6th year PhD student. My research interests are macro-labor, equilibrium search, dynamic contracting and applied econometrics.
My current work focuses on equilibrium allocation of workers to jobs in economies with search frictions and the setting of wage contracts between workers and firms. I am interested in how inefficiencies arise in equilibrium and how they can be alleviated by labor market policies.

  • Macro-labour
  • Equilibrium search
  • Dynamic contracting
  • Applied econometrics

Productivity shocks, Optimal Contracts and Income Dynamics

This paper examines how employer and worker specific productivity shocks transmit to wages and employment. I characterize the optimal contract in an equilibrium directed-search model that allows for worker and firm heterogeneity as well as productivity shocks to both. In equilibrium risk-neutral firms offer risk-averse workers contracts where payments are back-loaded in good times and front-loaded in bad ones: the combination of search frictions, shocks and hidden on-the-job search results in partial insurance against firm and worker shocks which is in line with empirical facts. The model is estimated on Swedish matched employer-employee data. Preliminary results show that firm shocks are responsible for 10% of permanent income shocks.