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Heterogeneous Wage Cyclicality And Unemployment Fluctuations
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Book Synopsis Heterogeneous Wage Cyclicality and Unemployment Fluctuations by : Andrei Zaloilo
Download or read book Heterogeneous Wage Cyclicality and Unemployment Fluctuations written by Andrei Zaloilo and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms hire workers from different pools. Some firms hire more unemployed workers than others, making their demand for labor more important for unemployment. I differentiate jobs based on their hiring pool and estimate their wage cyclicality. The key finding is that wages in jobs hiring from unemployment are half as cyclical as wages in other jobs, for both incumbent workers and new hires. To measure the effects of this on unemployment volatility, I develop a labor search model with separation of search and heterogeneous wage rigidity and show that accounting for this heterogeneity increases the volatility of unemployment by 14%-34%.
Book Synopsis Unemployment Fluctuations, Match Quality, and the Wage Cyclicality of New Hires by : Mark Gertler
Download or read book Unemployment Fluctuations, Match Quality, and the Wage Cyclicality of New Hires written by Mark Gertler and published by . This book was released on 2016 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic models often incorporate some form of wage stickiness to help account for employment fluctuations. However, a recent literature calls in to question this approach, citing evidence of new hire wage cyclicality from panel data studies as evidence for contractual wage flexibility for new hires, which is the relevant margin for employment volatility. We analyze data from the SIPP and find that the wages for new hires coming from unemployment are no more cyclical than those of existing workers, suggesting wages are sticky at the relevant margin. The new hire wage cyclicality found in earlier studies instead appears to reflect cyclical average wage gains of workers making job-to-job transitions, which we interpret as evidence of procyclical match quality for new hires from employment. We then develop a quantitative general equilibrium model with sticky wages via staggered contracting, on-the-job search, and variable match quality, and show that it can account for both the panel data evidence and aggregate labor market regularities. An additional implication of the model is that a sullying effect of recessions emerges, along the lines originally suggested by Barlevy (2002).
Book Synopsis Marginal Jobs, Heterogeneous Firms, & Unemployment Flows by : Michael W. L. Elsby
Download or read book Marginal Jobs, Heterogeneous Firms, & Unemployment Flows written by Michael W. L. Elsby and published by . This book was released on 2008 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Much recent research has sought to explain the cyclical amplitude of unemployment fluctuations in the US. This paper shows that amplification of the cyclical variation of unemployment can be obtained from adding two very simple features to an otherwise standard model of the aggregate labor market, namely downward sloped short run labor demand and endogenous job destruction. This generalized model is able to match more closely the cyclicality of both job finding and employment to unemployment flows observed in US data. Contrary to standard models, the model can generate amplification while maintaining realistic surplus to employment relationships. In addition, we uncover a novel source of amplification of cyclical shocks that is generated by the interaction of countercyclical unemployment inflows and job creation.
Book Synopsis Heterogeneity and cyclical unemployment by : Mark Bils
Download or read book Heterogeneity and cyclical unemployment written by Mark Bils and published by . This book was released on 2009 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off--it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.
Book Synopsis The Heterogeneous Cyclicality of Income and Wages Among the Distribution by : María Cervini-Plá
Download or read book The Heterogeneous Cyclicality of Income and Wages Among the Distribution written by María Cervini-Plá and published by . This book was released on 2015 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the cyclicality of real wages and income using individual data for the UK over the 1991-2008 period. By paying special attention to the heterogeneity among different earnings and income groups, we document that individuals at the top of the distribution are more cyclical than lower ones. Moreover, the estimated cyclicality is considerably higher in recessions than in expansions for top-incomes. We also show that real wages and income are roughly a cyclical for low wage and income workers. Instead, their adjustment to the cycle takes place through transitions to and from unemployment.
Book Synopsis Heterogeneity and Cyclical Unempoyment by : Mark Bils
Download or read book Heterogeneity and Cyclical Unempoyment written by Mark Bils and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Labor Markets and Business Cycles by : Robert Shimer
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.
Book Synopsis Wage and Employment Cyclicalities at the Establishment Level by : Christian Merkl
Download or read book Wage and Employment Cyclicalities at the Establishment Level written by Christian Merkl and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across establishments. Based on this heterogeneity, we estimate the relationship between employment cyclicality and wage cyclicality at the establishment level. We use this micro-estimate as a calibration target for a macro labor market flow model with heterogeneous wage dynamics that nests the standard search and matching model. Based on this micro-macro linkage, we provide a new quantitative benchmark for the role of wage rigidity in search and matching models. Furthermore, we show that acyclical and countercyclical wage establishments are key drivers for stronger labor market reactions in recessions than in booms.
Book Synopsis Hysteresis and Business Cycles by : Ms.Valerie Cerra
Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Book Synopsis Optimal Unemployment Insurance by : Andreas Pollak
Download or read book Optimal Unemployment Insurance written by Andreas Pollak and published by Mohr Siebeck. This book was released on 2007 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Designing a good unemployment insurance scheme is a delicate matter. In a system with no or little insurance, households may be subject to a high income risk, whereas excessively generous unemployment insurance systems are known to lead to high unemployment rates and are costly both from a fiscal perspective and for society as a whole. Andreas Pollak investigates what an optimal unemployment insurance system would look like, i.e. a system that constitutes the best possible compromise between income security and incentives to work. Using theoretical economic models and complex numerical simulations, he studies the effects of benefit levels and payment durations on unemployment and welfare. As the models allow for considerable heterogeneity of households, including a history-dependent labor productivity, it is possible to analyze how certain policies affect individuals in a specific age, wealth or skill group. The most important aspect of an unemployment insurance system turns out to be the benefits paid to the long-term unemployed. If this parameter is chosen too high, a large number of households may get caught in a long spell of unemployment with little chance of finding work again. Based on the predictions in these models, the so-called "Hartz IV" labor market reform recently adopted in Germany should have highly favorable effects on the unemployment rates and welfare in the long run.
Book Synopsis The Roaring Nineties by : Alan B. Krueger
Download or read book The Roaring Nineties written by Alan B. Krueger and published by Russell Sage Foundation. This book was released on 2002-01-17 with total page 639 pages. Available in PDF, EPUB and Kindle. Book excerpt: The positive social benefits of low unemployment are many—it helps to reduce poverty and crime and fosters more stable families and communities. Yet conventional wisdom—born of the stagflation of the 1970s—holds that sustained low unemployment rates run the risk of triggering inflation. The last five years of the 1990s—in which unemployment plummeted and inflation remained low—called this conventional wisdom into question. The Roaring Nineties provides a thorough review of the exceptional economic performance of the late 1990s and asks whether it was due to a lucky combination of economic circumstances or whether the new economy has somehow wrought a lasting change in the inflation-safe rate of unemployment. Led by distinguished economists Alan Krueger and Robert Solow, a roster of twenty-six respected economic experts analyzes the micro- and macroeconomic factors that led to the unexpected coupling of low unemployment and low inflation. The more macroeconomically oriented chapters clearly point to a reduction in the inflation-safe rate of unemployment. Laurence Ball and Robert Moffitt see the slow adjustment of workers' wage aspirations in the wake of rising productivity as a key factor in keeping inflation at bay. And Alan Blinder and Janet Yellen credit sound monetary policy by the Federal Reserve Board with making the best of fortunate circumstances, such as lower energy costs, a strong dollar, and a booming stock market. Other chapters in The Roaring Nineties examine how the interaction between macroeconomic and labor market conditions helped sustain high employment growth and low inflation. Giuseppe Bertola, Francine Blau, and Lawrence M. Kahn demonstrate how greater flexibility in the U.S. labor market generated more jobs in this country than in Europe, but at the expense of greater earnings inequality. David Ellwood examines the burgeoning shortage of skilled workers, and suggests policies—such as tax credits for businesses that provide on-the-job-training—to address the problem. And James Hines, Hilary Hoynes, and Alan Krueger elaborate the benefits of sustained low unemployment, including budget surpluses that can finance public infrastructure and social welfare benefits—a perspective often lost in the concern over higher inflation rates. While none of these analyses promise that the good times of the 1990s will last forever, The Roaring Nineties provides a unique analysis of recent economic history, demonstrating how the nation capitalized on a lucky confluence of economic factors, helping to create the longest peacetime boom in American history. Copublished with The Century Foundation
Book Synopsis Employment Cost Index and Employee Benefits Survey by :
Download or read book Employment Cost Index and Employee Benefits Survey written by and published by . This book was released on 1995 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Demand Composition and Income Distribution by : David Pothier
Download or read book Demand Composition and Income Distribution written by David Pothier and published by International Monetary Fund. This book was released on 2014-12-15 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper highlights how changes in the composition of demand affect income dispersion in the short run. We first document how the share of aggregate spending dedicated to labour-intensive goods and services shrinks (expands) during downturns (booms), and argue that this contributes to the observed pro-cyclicality of employment and output in labour-intensive industries. Using a two-sector general equilibrium model, we then assess how this demand composition channel influences the cyclical properties of the income distribution. Consistent with empirical evidence, we find income inequality to be countercyclical due to changes in the level of employment and (to a lesser extent) relative factor prices. The model also shows that wealth redistribution policies can potentially involve a trade-off between equality and output, depending on how they affect the composition of aggregate demand.
Book Synopsis The Labor Market and Economic Adjustment by : Pierre-Richard Agénor
Download or read book The Labor Market and Economic Adjustment written by Pierre-Richard Agénor and published by International Monetary Fund. This book was released on 1995-11-01 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Book Synopsis Mismatch Unemployment by : Aysegul Sahin
Download or read book Mismatch Unemployment written by Aysegul Sahin and published by . This book was released on 2012 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate. We use this framework to measure the contribution of mismatch to the recent rise in U.S. unemployment by exploiting two sources of cross-sectional data on vacancies, JOLTS and HWOL, a new database covering the universe of online U.S. job advertisements. Mismatch across industries and occupations explains at most 1/3 of the total observed increase in the unemployment rate, whereas geographical mismatch plays no apparent role. The share of the rise in unemployment explained by occupational mismatch is increasing in the education level.
Book Synopsis Efficiency Wage Models of the Labor Market by : George A. Akerlof
Download or read book Efficiency Wage Models of the Labor Market written by George A. Akerlof and published by Cambridge University Press. This book was released on 1986-11-28 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt: The contributors explore the reasons why involuntary unemployment happens when supply equals demand.
Book Synopsis Monopsony in Motion by : Alan Manning
Download or read book Monopsony in Motion written by Alan Manning and published by Princeton University Press. This book was released on 2013-12-03 with total page 414 pages. Available in PDF, EPUB and Kindle. Book excerpt: What happens if an employer cuts wages by one cent? Much of labor economics is built on the assumption that all the workers will quit immediately. Here, Alan Manning mounts a systematic challenge to the standard model of perfect competition. Monopsony in Motion stands apart by analyzing labor markets from the real-world perspective that employers have significant market (or monopsony) power over their workers. Arguing that this power derives from frictions in the labor market that make it time-consuming and costly for workers to change jobs, Manning re-examines much of labor economics based on this alternative and equally plausible assumption. The book addresses the theoretical implications of monopsony and presents a wealth of empirical evidence. Our understanding of the distribution of wages, unemployment, and human capital can all be improved by recognizing that employers have some monopsony power over their workers. Also considered are policy issues including the minimum wage, equal pay legislation, and caps on working hours. In a monopsonistic labor market, concludes Manning, the "free" market can no longer be sustained as an ideal and labor economists need to be more open-minded in their evaluation of labor market policies. Monopsony in Motion will represent for some a new fundamental text in the advanced study of labor economics, and for others, an invaluable alternative perspective that henceforth must be taken into account in any serious consideration of the subject.
