The unemployment volatility puzzle
is wage stickiness the answer?
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Author
Contributions
- London School of Economics and Political Science. Centre for Economic Performance. - Contributor
Publication
2007 - Centre for Economic Performance, London School of Economics and Political Science, London, England
Language
English
Word Count
0 words, Guess
Page Count
0 pages
Physical Format
Electronic resource
Identifiers
- Library of Congress Control Number2007619443
- Open LibraryOL16390240M
Classifications
- LCCHC10
Description
study the cyclical behavior of an equilibrium search model with endogenous job creation and destruction, with focus on the model's failure to match the observed cyclical volatility of unemployment. Job creation in the model is influenced by wages in new matches. I summarize microeconometric evidence on wages in new matches and show that the key model elasticities are consistent with the evidence. Therefore explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages. I discuss some extensions of the model that can increase cyclical unemployment volatility through mechanisms other than wage stickiness.
Subjects
Series Statement
- CEP discussion paper -- no. 839
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