Labor-Market Fluctuations and On-the-Job Search

50 Pages Posted: 28 Jan 2008

See all articles by Eva Nagypal

Eva Nagypal

Northwestern University - Department of Economics; Northwestern University - Institute for Policy Research

Date Written: November 2007

Abstract

This paper argues that a model of the aggregate labor market that incorporates the observed extent of job-to-job transitions can explain all the cyclical volatility in vacancy and unemployment rates in U.S. data in response to shocks of the observed magnitude. The key to this result is the complementarity between on-the-job search and costly hiring that leads employers to expect a higher payoff from recruiting employed searchers. This higher expected payoff explains why firms recruit more when the number of employed searchers is high during periods of low unemployment.

Suggested Citation

Nagypal, Eva, Labor-Market Fluctuations and On-the-Job Search (November 2007). Available at SSRN: https://ssrn.com/abstract=1088005 or http://dx.doi.org/10.2139/ssrn.1088005

Eva Nagypal (Contact Author)

Northwestern University - Department of Economics ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Northwestern University - Institute for Policy Research ( email )

2040 Sheridan Road
Evanston, IL 60208-4100
United States

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