Matching theory in job market

There is talking about a new paper on job matching processes in the economy.  Specifically, we want to understand why unemployment takes such a large jump in a recession, even a mild recession.

I go through these paper, but I generally bias my view by modeling the process in basket brigade theory.  So, I have two queues, a queue of job applicants and a queue of job requirements.    Sort, sort both queues by significance and match hem using bit error to make the graph s isomorphic.    Hiring managers accumulate labor error, the gains and losses from slight mismatches in the hiring process. They sometimes get a golden employee, on the cheap, and earn labor points.

Here is my redacted versionof the abstrct:

To generate big responses of unemployment to productivity changes, researchers have reconfigured matching models in various ways: by elevating the utility of leisure, by making wages sticky, by assuming alternating-offer wage bargaining, by introducing costly acquisition of credit, by assuming fixed matching costs, or by positing government mandated unemployment compensation and layoff costs. 

[mostly adding transaction costs]

All of these redesigned matching models increase responses of unemployment to movements in productivity by diminishing the fundamental surplus fraction, an upper bound on the fraction of a job’s output that the invisible hand can allocate to vacancy creation. Business cycles and welfare state dynamics of an entire class of reconfigured matching models all operate through this common channel.

OK, sudden unemployment occurs when the hiring managers are told to get their labor error down.  They need to reorganize such that productive skills match valuable tasks.  Cull the herd.

A bound defines a basket.  It is quantized, not smooth.  The hiring manager needs to keep the excess labor lower for a while.  The question is why is excess labor around the office quantized?  Get ionto that later.

ANyway, hiring managers have to keep people more productive today, do a better matching, have less excess labor around the office  But he has to lay off a set of staff whose productivity falls below the new mark.

The basket analogy holds as the hiring manager can keep excess productivity on tap, thus letting the applicant queue stabilize.  If he gets a smaller basket of surplus productivity, then he has to have a longer search window on the applicants, all queues grow, and matches more accurate.

Basic process, the baskets are quantized so the queues are stable, but the stable queue has a known variance, hence the quantization effect via some equivalent tradebook uncertainty.  

Anyway this is not my field, I don't think abut it much but this paper seems very interesting.