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Author : Renato Faccini
Publisher :
ISBN 13 :
Total Pages : 29 pages
Book Rating : 4.:/5 (535 download)
Download or read book Labor-market Volatility in the Search-and-matching Model written by Renato Faccini and published by . This book was released on 2008 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Andrea Hornstein
Publisher : DIANE Publishing
ISBN 13 : 1437904963
Total Pages : 33 pages
Book Rating : 4.4/5 (379 download)
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.
Author : Wouter J. Den Haan
Publisher :
ISBN 13 :
Total Pages : 21 pages
Book Rating : 4.:/5 (115 download)
Download or read book Volatile Hiring written by Wouter J. Den Haan and published by . This book was released on 2020 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes in detail the role of uncertainty shocks in search and matching models of the labor market, both when uncertainty actually increases and when it is only expected to do so. The non-linear nature of search frictions increases average unemployment rates during periods with higher volatility. However, they are by themselves not sufficient to raise the unemployment rate in response to an increase in perceived uncertainty. We show that key to understanding the result of Leduc and Liu (2016) that perceived uncertainty does affect the unemployment rate is the particular form of wage bargaining chosen, Nash bargaining; option value considerations play no role.
Author : Nicolas Petrosky-Nadeau
Publisher : MIT Press
ISBN 13 : 0262036452
Total Pages : 271 pages
Book Rating : 4.2/5 (62 download)
Download or read book Labor, Credit, and Goods Markets written by Nicolas Petrosky-Nadeau and published by MIT Press. This book was released on 2017-11-10 with total page 271 pages. Available in PDF, EPUB and Kindle. Book excerpt: An integrated framework to study the theoretical and quantitative properties of economies with frictions in labor, financial, and goods markets. This book offers an integrated framework to study the theoretical and quantitative properties of economies with frictions in multiple markets. Building on analyses of markets with frictions by 2010 Nobel laureates Peter A. Diamond, Dale T. Mortensen, and Christopher A. Pissarides, which provided a new theoretical approach to search markets, the book applies this new paradigm to labor, finance, and goods markets. It shows, in particular, how frictions in different markets interact with each other. The book first covers the main developments in the analysis of the labor market in the presence of frictions, offering a systematic analysis of the dynamics of this environment and explaining the notion of macroeconomic volatility. Then, building on the generality and simplicity of the search analysis, the book adapts it to other markets, developing the tools and concepts to analyze friction in these markets. The book goes beyond the traditional general equilibrium analysis of markets, which is often frictionless. It begins with the standard analysis of a single market, and then sequentially integrates more markets into the analysis, progressing from labor to financial to goods markets. Along the way, the book provides a number of useful results and insights, including the existence of a direct link between search frictions and the degree of volatility in the economy.
Author : Kathrin Tiecke
Publisher : GRIN Verlag
ISBN 13 : 3640801032
Total Pages : 65 pages
Book Rating : 4.6/5 (48 download)
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.
Author : Robert Shimer
Publisher : Princeton University Press
ISBN 13 : 1400835232
Total Pages : 189 pages
Book Rating : 4.4/5 (8 download)
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.
Author : Morten O. Ravn
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.3/5 ( download)
Download or read book The Consumption-tightness Puzzle written by Morten O. Ravn and published by . This book was released on 2006 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This paper introduces a labor force participation choice into a labor market matching model embedded in a dynamic stochastic general equilibrium set-up with production and savings. The participation choice is modelled as a tradeoff between forgoing the expected benefits of being search active and engaging in costly labor market search. The model induces a symmetry in firms' and workers' search decision since both sides of the labor market vary search effort at the extensive margins. We show that this set-up is of considerable analytical convenience and that it gives rise to a linear relationship between labor market tightness and the marginal utility of consumption. We refer to the latter as the "consumption - tightness puzzle" because (a) it gives rise to a number of counterfactual implications, and (b) it is a robust implication of theory. Amongst the counterfactual implications are very low volatility of tightness, procyclical unemployment, and a positively sloped Beveridge curve. These implications all derive from procyclical variations in participation rates that follow from allowing for the extensive search margin"--National Bureau of Economic Research web site.
Author : Dale T. Mortensen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Labor-Market Volatility in Matching Models with Endogenous Separations written by Dale T. Mortensen and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The business-cycle behavior of a matching model with endogenous separations is studied in this paper. We show that whether aggregate productivity shocks have a larger effect on the vacancyunemployment ratio than in a model with exogenous separations depends on whether worker productivity stochastically increases with tenure. The difference in the response is quantitatively small, however. We also show that the cleansing effect introduced by allowing for endogenous separations can help in reconciling the model with observed fluctuations in the unemployment rate, but not with those in the vacancy rate.
Author : Ching Yang Lin
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Estimating a Search and Matching Model of the Aggregate Labor Market in Japan written by Ching Yang Lin and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies how well a search and matching model can describe aggregate Japanese labor market dynamics in a full information setting. We develop a discrete-time search and matching model with productivity and separation shocks and use it as a data-generating process for our empirical analysis. Using Bayesian methods, we estimate the model for data on unemployment and vacancy postings in Japan. We find that the model is successful in matching the volatility in unemployment and vacancies while it does not match the volatility of output and wages. We also find that both productivity and separation shocks contribute to movements in unemployment and vacancies, but productivity shocks more so.
Author : Pierrick Clerc
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (116 download)
Download or read book Three Essays on Labor Market Volatility, Monetary Policy and Real Wage Stickiness written by Pierrick Clerc and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The starting point of this PhD dissertation is related to the Shimer puzzle, i.e. the unability of the search and matching model to reproduce the high volatility of the unemployment rate. Real wage rigidities were considered as the main solution to this puzzle. Nevertheless, Sveen and Weinke (2008) argue that those rigidities would not have any impact on the unemployment volatility when hours per worker are determined by the firms. In the first chapter, we argue that the capacity of real wage rigidities to solve the puzzle critically depends on the way that rigidities are introduced. When real wage stickiness results from the «credible bargaining» (Hall and Milgrom ,2008), we show that the unemployment volatility is magnified, even for hours being firms' decisions. A significant stabilization trade-off between inflation and unemployment is moreover restituted. However, we stress in the second chapter that the credible bargaining delivers a moderate degree of wage rigidity and then requires unrealistic values for some parameters to completely replicate the unemployment volatility. We integrate asymmetric information into this framework and show that the resulting higher wage stickiness fully reproduces the volatility for a plausible calibration. ln the last chapter, we emphasize that it is possible to solve the puzzle without resting on real wage stickiness, by considering a particular calibration of the model with endogenous separations. We also highlight a central mechanism of this framework, for which the volatility of the separation rate amplifies that of the job finding rate.
Author : Bjoern Bruegemann
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.:/5 (123 download)
Download or read book Rent Rigidity, Asymmetric Information, and Volatility Bounds in Labor Markets written by Bjoern Bruegemann and published by . This book was released on 2007 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent findings have revived interest in the link between real wage rigidity and employment fluctuations, in the context of frictional labor markets. The standard search and matching model fails to generate substantial labor market fluctuations if wages are set by Nash bargaining, while it can generate fluctuations in excess of what is observed if wages are completely rigid. This suggests that less severe rigidity may suffice. We study a weaker notion of real rigidity, which arises only in frictional labor markets, where the wage is the sum of the worker's opportunity cost (the value of unemployment) and a rent. With wage rigidity this sum is acyclical; we consider rent rigidity, where only the rent is acyclical. We offer two contributions. First, we derive upper bounds on labor market volatility that apply if the model of wage determination generates weakly procyclical worker rents, and that are attained by rent rigidity. Quantitatively, the bounds are tight: rent rigidity generates no more than a third of observed volatility, an outcome that is closer to Nash bargaining than to wage rigidity. Second, we show that the bounds apply to a sequence of famous solutions to the bargaining problem under asymmetric information: at best they generate rigid rents but not rigid wages.
Author : Wataru Hirata
Publisher :
ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.:/5 (13 download)
Download or read book Reconciling the Relevance of Labor Market Institutions in Search and Matching Models with International Evidence written by Wataru Hirata and published by . This book was released on 2019 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether search and matching frictions in labor markets can account for cross-country differences in business cycle properties. The particular interest is the joint effect of two institutional variables, employment protection and the replacement income of unemployed workers. I first document an empirical regularity that higher degrees of employment protection and/or lower replacement rates are associated with larger standard deviations of real wages relative to those of unemployment in OECD members. However, there is a positive correlation between employment protection and replacement rates implying that the net effect of the systematic difference in these institutional variables could be ambiguous. I then show that modern macroeconomic models with search and matching frictions are broadly consistent with the stylized fact: the models predict that higher firing costs and/or lower replacement rates raise the wage volatility relative to that of unemployment. I find that this result is robust to alternative setups of non-labor markets. Finally, I find that the effect of the above institutions on inflation is minor.
Author : Brendan Epstein
Publisher : International Monetary Fund
ISBN 13 : 1475595867
Total Pages : 45 pages
Book Rating : 4.4/5 (755 download)
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.
Author : Victor Ortego Marti
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (847 download)
Download or read book Unemployment History and Frictional Wage Dispersion in Search Models of the Labor Market written by Victor Ortego Marti and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the inability of search models to match both observed labor market flows and the empirical wage distribution. I show that a known feature of the labor market, that unemployment hurts workers' wages, has an important effect on workers' search behavior, and explains why we observe that similar workers are paid different wages. The first chapter reviews the relevant literature. I begin by describing the findings in Hornstein, Krusell and Violante (2011) that baseline search models struggle to generate significant wage dispersion, the so-called frictional wage dispersion puzzle. Further, search models face a trade-off between matching the cross-sectional wage distribution and matching the cyclical volatility of unemployment and vacancies. The chapter reviews the unemployment volatility puzzle and explains this trade-off. Given that the thesis introduces the loss of human capital during unemployment, the chapter ends with a review of the related empirical literature. Chapter 2 studies wage dispersion among identical workers in a random matching search model in which workers lose human capital during unemployment. Wage dispersion increases, as workers accept lower wages to avoid long unemployment spells. I show that the model is an important improvement over baseline search models. The model with unemployment history explains between a third and half of the observed residual wage dispersion. In Chapter 3 I add on-the-job search to the model with unemployment history. Workers accept lower wages because they keep the option of searching for better paying jobs. Wage dispersion increases significantly. The model accounts for all of the residual wage dispersion. The model also generates substantial wage dispersion even for high values of non-market time. The chapter thus addresses the trade-off between explaining frictional wage dispersion and the cyclical behavior of unemployment.
Author : Kenneth Beauchemin
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (129 download)
Download or read book Diagnosing Labor Market Search Models written by Kenneth Beauchemin and published by . This book was released on 2008 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper constructs a multiple-shock version of the Mortensen-Pissarides labor market search model to investigate the basic model's well-known tendency to under predict the volatility of key labor market variables. Data on U.S. job finding and job separation probabilities are used to help estimate the parameters of a three-dimensional shock process comprising labor productivity, job separation, and matching or 'allocative' efficiency. The authors show that the Mortensen-Pissarides labor market search model requires significantly procyclical and volatile job separations to simultaneously account for high procyclical variations in jobfinding probabilities as well as relatively small net employment changes. Hence, the model is more fundamentally flawed than its inability to amplify shocks would suggest. This leads the authors to conclude that the model lacks mechanisms to generate procyclical matching efficiency and labor force reallocation. As for the latter, the authors conjecture that nontrivial labor force participation and job-to-job transitions are promising avenues of research.
Author : Robert Ernest Hall
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (254 download)
Download or read book The Labor Market and Macro Volatility written by Robert Ernest Hall and published by . This book was released on 2005 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The evolution of the aggregate labor market is far from smooth. I investigate the success of a macro model in replicating the observed levels of volatility of unemployment and other key variables. I take variations in productivity growth and in exogenous product demand (government purchases plus net exports) as the primary exogenous sources of fluctuations. The macro model embodies new ideas about the labor market, all based on equilibrium--the models I consider do not rest on inefficiency in the use of labor caused by an inappropriate wage. I find that non-standard features of the labor market are essential for understanding the volatility of unemployment. These models include simple equilibrium wage stickiness, where the sticky wage is an equilibrium selection rule. A second model based on modern bargaining theory delivers a different kind of stickiness and has a unique equilibrium. A third model posits fluctuations in matching efficiency that may arise from variations over time in the information about prospective jobs among job-seekers. Reasonable calibrations of each of the three models match the observed volatility of unemployment"--National Bureau of Economic Research web site.
Author : Pedro S. Amaral
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (13 download)
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.
