Research Seminar Series on Global Challenges – Edoardo Maria Acabbi (Universidad Carlos III de Madrid), 9th June 2022 at 12.15 p.m. (CET)

Global Challenges Seminar Series

Edoardo Maria Acabbi (Universidad Carlos III de Madrid) on A Labor Market Sorting Model of Scarring and Hysteresis (with Andrea Alati and Luca Mazzone), jointly organised by the Centro Studi Luca d’Agliano, BAFFI CAREFIN and the Department of Economics, Management and Quantitative Methods (University of Milan) in collaboration with the Dipartimento di Economia, Metodi Quantitativi e Strategie di Impresa (Università Milano Bicocca) and the Dipartimento di Ingegneria Gestionale (Politecnico di Milano) and the Department of Economics (University of Insubria).

The seminar will be held on Thursday, 9th June 2022 at 12:15 p.m. (CET) in a hybrid format:

– DEMM seminar room, Via Conservatorio 7, 2nd floor. According to the current COVID measures, the seminar room can accomodate 20 people.

– Via Zoom. Please register by email to


What are the long-run consequences of business cycle fluctuations for the skill distribution in the labor force? How is the sorting between firms and workers altered by aggregate fluctuations at different stages of the working life? And finally, what are the aggregate effects of changes in sorting for earnings dynamics, potential productivity and labor misallocation in the long run? We address these questions by proposing a tractable search equilibrium model of the labor market with aggregate risk, firm and worker heterogeneity, life-cycle dynamics and endogenous human capital accumulation. We show that sorting of workers to firms is a key factor in increasing the persistence of fluctuations, directly relating labor reallocation to economic hysteresis. We estimate the model on Italian administrative matched employer-employee data. Our estimates highlight the long term supply-side hysteresis effects of business cycles.