Chapter 6 provides some brief concluding remarks on directions for future research.
In this section, the discrete time two-state job search model is developed. Consider an infinitely-lived individual searching sequentially for a job over a finite horizon of length T. The finite horizon can be motivated by the existence of borrowing constraints. At the beginning of each period, t = 1 ... T - 1 the individual receives an offer of employment with probability p, having paid a search cost of c in the prior period. The individual begins the unemployment spell at t = 0, and at t = 1 the individual has been unemployed one period. The per-period wage associated with any particular job offer (wages are the only dimension of compensation) is drawn from a distribution function F(w). Once a wage offer is accepted the per-period wage is fixed. In this setting, the parameters p and c, and the function F are fundamental to the individual, i.e. there is no more fundamental decision made by the agent determining them. Thus, for example, search intensity cannot be chosen to influence the probability of receiving an offer.