Download or read book The Cyclical Volatility of Equilibrium Unemployment and Vacancies written by Gabriele Cardullo and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we explore the fluctuations of unemployment and vacancies in the Italian labour market over the last 20 years. Relying on the available sources of data for unfilled job openings, we find that even in Italy, similarly to other developed countries, there is a clean evidence of the unemployment volatility puzzle. In other words, we empirically assess that the tightness indicator is significantly more volatile than productivity over the whole period. In addition, on the theoretical ground, we show that a matching model with segmented labour markets and on-the-job search has the potential to provide a rationale for this pattern.
Download or read book The Cyclical Behavior of Equilibrium Unemployment and Vacancies Across OECD Countries written by Pedro S. Amaral and published by . This book was released on 2014 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that the inability of a standardly calibrated labor search-and-matching model to account for labor market volatility extends beyond the U.S. to a set of OECD countries. That is, the volatility puzzle is ubiquitous. We argue cross-country data is helpful in scrutinizing between potential solutions to this puzzle. To illustrate this, we show that the solution proposed in Hagedorn and Manovskii (2008) continues to deliver counterfactually low volatility in countries where labor productivity persistence and/or steady-state job-finding rates are sufficiently low. Moreover, the model's ability to generate high enough volatility depends on vacancy-filling-rate levels that seem counterfactual outside the U.S.
Download or read book The Cyclical Behavior of Equilibrium Unemployment and Vacancies written by Robert Shimer and published by . This book was released on 2003 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper argues that a broad class of search models cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the U.S., the vacancy-unemployment ratio is 20 times as volatile as average labor productivity, while under weak assumptions, search models predict that the vacancy-unemployment ratio and labor productivity have nearly the same variance. I establish this claim both using analytical comparative statics in a very general deterministic search model and using simulations of a stochastic version of the model. I show that a shock that changes average labor productivity primarily alters the present value of wages, generating only a small movement along a downward sloping Beveridge curve (unemployment-vacancy locus). A shock to the job destruction rate generates a counterfactually positive correlation between unemployment and vacancies. In both cases, the shock is only slightly amplified and the model exhibits virtually no propagation. I reconcile these findings with an existing literature and argue that the source of the model's failure is lack of wage rigidity, a consequence of the assumption that wages are determined by Nash bargaining
Download or read book The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe written by Alejandro Justiniano and published by . This book was released on 2011 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: We set-up a real business cycle model with search and matching frictions driven by several shocks, which nests full Nash Bargaining and wage rigidity as special cases and includes other transmission mechanisms suggested by the literature for the propagation and amplification of disturbances. The model is estimated using full information methods for two Anglo-Saxon countries (the US and the UK), two Continental European countries (France and Germany) and two Scandinavian countries (Norway and Sweden). We conduct inference with mixed frequency data, combining quarterly series for unemployment, vacancies, GDP, consumption, and investment, with annual data on unemployment flows. Parameters and shocks are estimated separately for each country, which can then vary in terms of search and hiring costs, workers' bargaining power, unemployment benefits levels, wage rigidity and the stochastic properties of disturbances. Overall, the structural model accounts reasonably well for differences in labor market dynamics observed between the two sides of the Atlantic and within Europe. Our estimates indicate that there is considerable cross-country variation in the contribution of technology shocks to the cyclical fluctuations of the labor market. Technology shocks alone replicate remarkably well the volatility in vacancies, unemployment and finding probabilities observed in US, with mixed success in Europe. In contrast, matching shocks and job destruction shocks play a larger role in most European countries relative to the US -- National Bureau of Economic Research web site.
Download or read book Financial Disruptions and the Cyclical Upgrading of Labor written by Brendan Epstein and published by International Monetary Fund. This book was released on 2017-06-08 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Amid total factor productivity (TFP) shocks job-to-job flows amplify the volatility of unemployment, but the aggregate implications of job-to-job flows amid financial shocks are less understood. To develop such understanding we model a general equilibrium labor-search framework that incorporates on-the-job (OTJ) search and distinctly accounts for the differential impact of TFP and financial shocks. Surprisingly, we find that the interaction of OTJ search with financial shocks is sufficiently different from its interaction with TFP shocks so that, under standard calibrations, our model generates aggregate dynamics exceedingly in line with the behavior of key U.S. macro data across several decades and in the wake of the Global Financial Crisis as well. Importantly, as in the data, the model yields relatively high volatilities of consumption, labor income, and unemployment. As such, our work contributes to resolving two limitations of current general equilibrium labor-search theory: under standard calibrations models without OTJ search generate implausibly low unemployment volatility, while models with OTJ search generate unemployment volatility closer to the data but at the expense of implausibly low consumption and labor-income volatility.
Download or read book How to Solve the Lack of Volatility in the Standard MP Model written by Kathrin Tiecke and published by GRIN Verlag. This book was released on 2011 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Paper (undergraduate) from the year 2009 in the subject Economics - Macro-economics, general, grade: 2,3, Humboldt-University of Berlin (Wirtschaftstheorie II (Makro)), course: Arbeitsmarktökonomik, language: English, abstract: The standard search and matching model (D. Mortensen and C.Pissarides,1994; Pissarides, 2000) has been recently challanged by many economists. The Mortensen-Pissarides (1994) model in general says that it takes time to match jobs and workers, which causes unemployment as an outcome of market frictions. The volatility of unemployment fluctuations in the model is not corresponding to the baseline calibration that R. Shimer (2005) has found for the US data. Many authors modified the model in order to solve this lack of volatility. First I introduce the Mortensen-Pissarides model to refer in the second part to the models parameters. Next, I present solutions found by Hall (2005) who solves the model via rigid wage setting and Hagedorn and Manovskii(2005) who provide a small surplus calibration to overcome the lack in volatility of the labor market variables. According to the so called "Shimer Puzzle" I will present shortly the findings of Gartner, Merkl and Rothe (2009), who calibrate the key labor market variables over the business cycle for the West-German labor market. Further I introduce Morensen and Nagypál (2007) publications on an amneded version of the model and a model with endogenous separations.
Download or read book Unemployment and Vacancy Fluctuations in the Matching Model Inspecting the Mechanism written by Andrea Hornstein and published by DIANE Publishing. This book was released on 2008-10 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The behavior of unemploy. over the bus. cycle plays an important role in economic policy considerations. Most of the variation in unemploy. comes about through changes in job-finding rates. Search theories of unemploy. study the implications of the matching process between unemployed workers and vacant jobs in environments with search frictions. The authors review work on whether these theories are consistent with the cyclical behavior of unemploy. and job-finding rates. They conclude that when the basic search model is calibrated to generate labor market volatility of a magnitude comparable with the data, it has sharp counterfactual implications for the size and the cyclicality of the wage share and for the elasticity of unemploy. to welfare benefits.
Download or read book Labor Markets and Business Cycles written by Robert Shimer and published by Princeton University Press. This book was released on 2010-04-12 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.
Download or read book The Cyclical Behavior of Equilibrium Unemployment and Vacancies written by and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The cyclical behaviour of equilibrium unemployment and vacancies revised written by Marcus Hagedorn and published by . This book was released on 2008 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Equilibrium Unemployment written by Joao Gomes and published by . This book was released on 1997 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: A search-theoretic general equilibrium model of frictional unemployment is shown to be consistent with some of the key regularities of unemployment over the business cycle. In the model the return to a job moves stochastically. Agents can choose either to quit and search for a better job, or continue working. Search generates job offers that agents can accept or reject. Two distinguishing features of current work relative to the existing business cycle literature on labor market fluctuations are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) there is imperfect insurance against unemployment.
Download or read book Business Cycles in the Equilibrium Model of Labor Market Search and Self insurance written by Makoto Nakajima and published by . This book was released on 2010 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: The author introduces risk-averse preferences, labor-leisure choice, capital, individual productivity shocks, and market incompleteness to the standard Mortensen-Pissarides model of search and matching and explores the model's cyclical properties. There are four main findings. First and foremost, the baseline model can generate the observed large volatility of unemployment and vacancies with a realistic replacement ratio of the unemployment insurance benefits of 64 percent. Second, labor-leisure choice plays a crucial role in generating the large volatilities; additional utility from leisure when unemployed makes the value of unemployment close to the value of employment, which is crucial in generating a strong amplification, even with the moderate replacement ratio. Besides, it contributes to the amplification through an adjustment in the intensive margin of labor supply. Third, the borrowing constraint or uninsured individual productivity shocks do not significantly affect the cyclical properties of unemployment and vacancies: Most workers are well insured only with self-insurance. Fourth, the model better replicates the business cycle properties of the U.S. economy, thanks to the co-existence of adjustments in the intensive and extensive margins of labor supply and the stronger amplification.
Download or read book Sectoral Shifts and Cyclical Unemployment Reconsidered written by S. Lael Brainard and published by . This book was released on 1990 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the importance of sectoral reallocation and cyclical unemployment; in the postwar US economy. It develops a new measure of reallocation shocks based on the variance of industry stock market excess returns over time, termed cross section volatility. Data on unemployment and vacancies is used to establish that the cross section volatility series is effective in isolating reallocation shocks. The series is then used to measure the contribution of reallocation shocks to aggregate unemployment and to unemployment; of varying durations. On average, about 40 percent of aggregate unemployment is explained by reallocation, but much of the variance of unemployment through time is better explained by cyclical shocks. Reallocation shocks account; for a relatively larger share of long duration unemployment.
Download or read book The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited written by Marcus Hagedorn and published by . This book was released on 2008 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Deep Habits and the Cyclical Behaviour of Equilibrium Unemployment and Vacancies written by and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We extend the standard textbook search and matching model by introducing deep habits in consumption. The cyclical fluctuations of vacancies and unemployment in our model can replicate those observed in the US data, with labour market tightness being 20 times more volatile than consumption. Vacancies display a hump-shaped response to technology shocks as well as autocorrelation coefficients that are in line with the empirical evidence. Our model preserves the assumption of fully flexible wages for the new hires and the calibration is consistent with the estimated elasticity of unemployment to unemployment benefits. The numerical simulations generate an artificial Beveridge curve which is in line with the data.
Download or read book Persistence and Volatility of Beveridge Cycles written by Florian Sniekers and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article explains the cyclical behavior of the fluctuations in unemployment and vacancies by demand externalities. Adding such externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining these fluctuations. Under plausible parameter values, the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the Beveridge curve. Calibrated to the duration of the business cycle, these endogenous “Beveridge cycles” are as persistent as the data, without losing any of the amplification of the standard model.
Download or read book Job Flow Dynamics and Firing Restrictions written by Pietro Garibaldi and published by . This book was released on 1995 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:
