The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited

55 Pages Posted: 27 Jan 2008

See all articles by Marcus Hagedorn

Marcus Hagedorn

affiliation not provided to SSRN

Iourii Manovskii

University of Pennsylvania - Department of Economics; IZA Institute of Labor Economics

Date Written: January 2008

Abstract

Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We use data on the cost of vacancy creation and cyclicality of wages to identify the two key parameters of the model - the value of non-market activity and the bargaining weights. Our calibration implies that the model is, in fact, consistent with the data.

Keywords: search, matching, business cycles, labor markets

JEL Classification: E24, E32, J41, J63, J64

Suggested Citation

Hagedorn, Marcus and Manovskii, Iourii, The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited (January 2008). ECB Working Paper No. 853. Available at SSRN: https://ssrn.com/abstract=1080246

Marcus Hagedorn (Contact Author)

affiliation not provided to SSRN ( email )

Iourii Manovskii

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-6880 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.econ.upenn.edu/~manovski/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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