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Abstract:

Journal Article
Job Creation and Job Destruction in the Theory of Unemployment
Dale T. Mortensen and Christopher A. Pissarides
July 1994

The Review of Economic Studies 61(3), 1994
DOI: 10.2307/2297896
https://academic.oup.com/restud/article-lookup/doi/10.2307/2297896


Tags: job-specific shock process; unemployment

In this paper we model a job-specific shock process in the matching model of unemployment with non-cooperative wage behaviour. We obtain endogenous job creation and job destruction processes and study their properties. We show that an aggregate shock induces negative correlation between job creation and job destruction whereas a dispersion shock induces positive correlation. The job destruction process is shown to have more volatile dynamics than the job creation process. In simulations we show that an aggregate shock process proxies reasonably well the cyclical behaviour of job creation and job destruction in the United States.

DOI: 10.2307/2297896
https://academic.oup.com/restud/article-lookup/doi/10.2307/2297896