|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CEE | CEP | FMG | SERC | STICERD||Cookies?|
Paper No' CEPDP1024: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: Unemployment; matching frictions; job rationing
JEL Classification: E24; E32; J64
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:This paper models unemployment as the result of matching frictions and job rationing. Job rationing is a shortage of jobs arising naturally in an economic equilibrium from the combination of some wage rigidity and diminishing marginal returns to labor. During recessions, job rationing is acute, driving the rise in unemployment, whereas matching frictions contribute little to unemployment. Intuitively, in recessions jobs are lacking, the labor market is slack, recruiting is easy and inexpensive, so matching frictions do not matter much. In a calibrated model, cyclical fluctuations in the composition of unemployment are quantitatively large.
Copyright © CEP & LSE 2003 - 2014 | LSE, Houghton Street, London WC2A 2AE | Tel: +44(0)20 7955 7673 | Email: email@example.com | Site updated 21 December 2014