|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CEE | CEP | FMG | SERC | STICERD||Cookies?|
Paper No' CEPDP0839: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: wages; unemployment, wage stickiness, job creation
JEL Classification: J63; J64; E3
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CEP Discussion Papers
Share: Google Bookmarks | Facebook | Twitter
Abstract:I study the cyclical behavior of an equilibrium search model with endogenous job creation and destruction, with focus on the model’s failure to match the observed cyclical volatility of unemployment. Job creation in the model is influenced by wages in new matches. I summarize microeconometric evidence on wages in new matches and show that the key model elasticities are consistent with the evidence. Therefore explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages. I discuss some extensions of the model that can increase cyclical unemployment volatility through mechanisms other than wage stickiness.
Copyright © CEP & LSE 2003 - 2013 | LSE, Houghton Street, London WC2A 2AE | Tel: +44(0)20 7955 7673 | Email: email@example.com | Site updated 18 May 2013