Marginal Jobs, Heterogeneous Firms, & Unemployment Flows

57 Pages Posted: 8 Feb 2008 Last revised: 25 Aug 2022

See all articles by Michael Elsby

Michael Elsby

School of Economics, University of Edinburgh

Ryan Michaels

University of Michigan at Ann Arbor - Department of Economics

Date Written: February 2008

Abstract

This paper introduces a notion of fir m size into a search and matching model with endogenous job destruction. The outcome is a rich, yet analytically tractable framework that can be used to analyze a broad set of features of both the cross section and the dynamics of the aggregate labor market. In a set of quantitative applications we show that the model can provide a coherent account of a) the salient features of the distributions of employer size, and employment growth across establishments; b) the amplitude and propagation of cyclical fluctuations in flows between employment and unemployment; c) the negative comovement of unemployment and vacancies in the form of the Beveridge curve; and d) the dynamics of the distribution of employer size over the business cycle.

Suggested Citation

Elsby, Michael and Michaels, Ryan F., Marginal Jobs, Heterogeneous Firms, & Unemployment Flows (February 2008). NBER Working Paper No. w13777, Available at SSRN: https://ssrn.com/abstract=1091412

Michael Elsby (Contact Author)

School of Economics, University of Edinburgh ( email )

31 Buccleuch Place
Edinburgh, EH8 9JT
United Kingdom

Ryan F. Michaels

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

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