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Long Live the Vacancy
[working paper]
Corporate Editor
Institut für Höhere Studien (IHS), Wien
Abstract
We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions... view more
We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions for constrained efficiency and discuss important implications of vacancy longevity for modeling and calibration, in particular regarding match cyclicality and wages. When calibrated to the postwar US economy, the model explains not only standard deviations and autocorrelations of labor market variables, but also their dynamic correlations with only one shock.... view less
Keywords
job; business cycle; unemployment; wage determination; job offer; labor market
Classification
Labor Market Research
Free Keywords
Beveridge curve; job destruction; random matching; separations; unemployment volatility
Document language
English
Publication Year
2020
City
Wien
Page/Pages
44 p.
Series
IHS Working Paper, 22
Status
Published Version; reviewed