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Author: Robert Shimer
Publisher: Princeton University Press
ISBN: 1400835232
Category : Business & Economics
Languages : en
Pages : 189
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Book Description
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: Robert Shimer
Publisher: Princeton University Press
ISBN: 1400835232
Category : Business & Economics
Languages : en
Pages : 189
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Book Description
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: Toshihiko Mukoyama
Publisher:
ISBN:
Category :
Languages : en
Pages : 69
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Book Description
We create a novel measure of job search effort starting in 1994 by exploiting the overlap between the Current Population Survey and the American Time Use Survey. We examine the cyclical behavior of aggregate job search effort using time series and cross-state variation and find that it is countercyclical. About half of the countercyclical movement is explained by a cyclical shift in the observable characteristics of the unemployed. Individual responses to labor market conditions and drops in wealth are important in explaining the remaining variation.
Author: Andreas Pollak
Publisher: Mohr Siebeck
ISBN: 9783161493041
Category : Business & Economics
Languages : en
Pages : 204
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Book Description
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.
Author: Stephen A. Woodbury
Publisher: Springer Science & Business Media
ISBN: 9401002355
Category : Business & Economics
Languages : en
Pages : 244
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Book Description
Search Theory and Unemployment contains nine chapters that survey and extend the theory of job search and its application to the problem of unemployment. The volume ranges from surveys of job search theory that take microeconomic and macroeconomic perspectives to original theoretical contributions which focus on the externalities arising from non-sequential search and search under imperfect information. It includes a clear and authoritative survey of econometric methods that have been developed to estimate models of job search, as well as two lucid contributions to the empirical search literature. Finally, it includes a study that reviews and extends the literature on optimal unemployment insurance and concludes with an appraisal of the influence of search theory on the thinking of macroeconomic policymakers.
Author: Anthony Papac
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This dissertation consists of two essays on job search and job choice. In Chapter 1, I examine how on-the-job search (OJS) effort of employed workers varies over the business cycle. First, I document new evidence that aggregate OJS effort rises during a recession, as more workers start searching on-the-job and average search intensity increases when unemployment rises. Next, I account for compositional changes in the pool of employed workers and job seekers over the business cycle and find that workers change their search behavior in response to changing economic conditions. In particular, workers are more likely to search due to fear of job loss and search for an additional job when unemployment is higher. In addition, I find that job seekers increase their search intensity when unemployment rises during a recession. In Chapter 2, I estimate the value that workers place on non-wage job characteristics and assess their impact on compensation inequality in Germany. First, I evaluate the incidence of four key job attributes and find large disparities in the prevalence of job attributes by gender, education, and age. Next, I analyze an experiment given as part of a national survey in Germany to estimate the value that workers place on eight non-wage job attributes. In particular, I find that workers are willing to pay 31% of their wage to have a permanent employment contract, 13% of their wage for good promotion opportunities, 10% of their wage for schedule flexibility, and 8% of their wage to avoid overtime work requirements. Finally, I find that accounting for the incidence and valuation of non-wage job characteristics widens compensation inequality in Germany.
Author: Andrea Hornstein
Publisher: DIANE Publishing
ISBN: 1437904963
Category : Business & Economics
Languages : en
Pages : 33
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Book Description
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:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Ms.Valerie Cerra
Publisher: International Monetary Fund
ISBN: 1513536990
Category : Business & Economics
Languages : en
Pages : 50
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Book Description
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.
Author: Jeremy Schwartz
Publisher:
ISBN:
Category : Global Financial Crisis, 2008-2009
Languages : en
Pages : 39
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Book Description
During the Great Recession of 2007, unemployment reached nearly 10 percent and the ratio of unemployment to open positions (as measured by the Help Wanted OnLine Index) more than tripled. The weak labor market prompted an unprecedented extension in the length of time in which a claimant can collect unemployment insurance (UI) to 99 weeks, at an expense to date of $226.4 billion. While many claim that extending UI during a recession will reduce search intensity, the effect of weak labor market conditions on search remains a mystery. As a result, policymakers are in the dark as to whether UI extensions reduce already low search effort during recessions or perhaps decrease excessive search, which causes congestion in the labor market. At the same time, modelers of the labor market have little empirical justification for their assumptions on how search intensity changes over the business cycle. This paper develops a search model where the impact of macro labor market conditions on a worker's search effort depends on whether these two factors are substitutes or complements in the job search process. Parameter estimates of the structural model using a sample of unemployment spells from the National Longitudinal Survey of Youth 1997 indicate that macro labor market conditions and individual search effort are complements and move together over the business cycle. The estimation also reveals that more risk-averse and less wealthy individuals exhibit less search effort.
Author: Jeremy Greenwood
Publisher: London, Ont. : Department of Economics, University of Western Ontario
ISBN:
Category : Business cycles
Languages : en
Pages : 42
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Book Description
