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Labor-market Frictions and Employment Fluctuations

1998 Labor market
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Release : 1998
Genre : Labor market
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Book Synopsis Labor-market Frictions and Employment Fluctuations by : Robert E. Hall

Download or read book Labor-market Frictions and Employment Fluctuations written by Robert E. Hall. This book was released on 1998. Available in PDF, EPUB and Kindle. Book excerpt: The labor market occupies center stage in modern theories of fluctuations. The most important phenomenon to explain and understand in a recession is the sharp decline in employment and jump in unemployment. This chapter for the Handbook of Macroeconomics considers explanations based on frictions in the labor market. Earlier research within the real business cycle paradigm considered frictionless labor markets where fluctuations in the volume of work effort represented substitution by households between work in the market and activities at home. A preliminary section of the chapter discusses why frictionless models are incomplete they fail to account for either the magnitude or persistence of fluctuations in employment. And the frictionless models fail completely to describe unemployment. The evidence suggests strongly that consideration of unemployment as a third use of time is critical for a realistic model. The two elements of a theory of unemployment are a mechanism for workers to lose or leave their jobs and an explanation for the time required for them to find new jobs. Theories of mechanism design or of continuous re-bargaining of employment terms provide the first. The theory of job search together with efficiency wages and related issues provides the second. Modern macro models incorporating these features come much closer than their predecessors to realistic and rigorous explanations of the magnitude and persistence of fluctuations.

Labor Markets and Business Cycles

2010-04-12 Business & Economics
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Release : 2010-04-12
Genre : Business & Economics
Kind : eBook
Book Rating : 232/5 ( reviews)

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Book Synopsis Labor Markets and Business Cycles by : Robert Shimer

Download or read book Labor Markets and Business Cycles written by Robert Shimer. This book was released on 2010-04-12. 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.

Sticky Feet

2014-07-03 Business & Economics
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Release : 2014-07-03
Genre : Business & Economics
Kind : eBook
Book Rating : 637/5 ( reviews)

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Book Synopsis Sticky Feet by : Claire H. Hollweg

Download or read book Sticky Feet written by Claire H. Hollweg. This book was released on 2014-07-03. Available in PDF, EPUB and Kindle. Book excerpt: This report quantifies labor mobility costs in developing countries and simulates the implied adjustment paths of employment and wages following a change in trade policy. High mobility costs are shown to reduce the potential gains to trade reform.

Gross Worker Flows and Fluctuations in the Aggregate Labor Market

2020
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Release : 2020
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Book Synopsis Gross Worker Flows and Fluctuations in the Aggregate Labor Market by : Per Krusell

Download or read book Gross Worker Flows and Fluctuations in the Aggregate Labor Market written by Per Krusell. This book was released on 2020. Available in PDF, EPUB and Kindle. Book excerpt: We build a three-state general equilibrium model of the aggregate labor market that features both standard labor supply forces and labor market frictions. Our model matches key features of the cyclical properties of employment, unemployment, and nonparticipation as well as those of gross worker flows across these three labor market states. Our key finding is that shocks to labor market frictions play a dominant role in accounting for labor market fluctuations. This is in contrast to the focus of the traditional RBC literature, which emphasized how employment fluctuations arise as a consequence of labor supply responses to price changes induced by TFP shocks.

Emerging Market Business Cycles

2012-10-09 Business & Economics
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Release : 2012-10-09
Genre : Business & Economics
Kind : eBook
Book Rating : 49X/5 ( reviews)

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Book Synopsis Emerging Market Business Cycles by : Ms.Emine Boz

Download or read book Emerging Market Business Cycles written by Ms.Emine Boz. This book was released on 2012-10-09. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies are characterized by higher consumption and real wage variability relative to output and a strongly countercyclical current account. A real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions and countercyclical interest rate shocks can jointly account for these regularities. In the face of countercyclical interest rate shocks, search-matching frictions increase future employment uncertainty, improving workers’ incentive to save and generating a greater response of consumption and the current account. Higher consumption response in turn feeds into larger fluctuations in the workers’ bargaining power while the interest rates shocks lead to variations in the firms’ willingness to hire; both of which contribute to a highly variable real wage.

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