Sensitivity of Job Destruction to Vintage and Tenure Effects

23 Pages Posted: 23 Sep 2014

See all articles by Juha Kilponen

Juha Kilponen

Bank of Finland - Research

Juuso Vanhala

Bank of Finland

Date Written: October 2014

Abstract

Matching models with endogenous job destruction typically deliver excessively volatile job destruction and moderate volatility of vacancies. In our model, vintage and tenure effects promote the creation of new matches that are temporarily more productive, while reducing the survival of temporarily less productive matches. This cleansing effect produces a counter‐cyclical inflow into unemployment, removes the strong response of job destruction to productivity shocks, and generates a downward‐sloping Beveridge curve, as in the data. The model also generates more volatility in vacancies, the job‐finding rate, and labor‐market tightness.

Keywords: Beveridge curve, cleansing effect, embodied technical change, matching, productivity shocks

JEL Classification: E24, E32, J64

Suggested Citation

Kilponen, Juha and Vanhala, Juuso, Sensitivity of Job Destruction to Vintage and Tenure Effects (October 2014). The Scandinavian Journal of Economics, Vol. 116, Issue 4, pp. 1068-1090, 2014. Available at SSRN: https://ssrn.com/abstract=2499943 or http://dx.doi.org/10.1111/sjoe.12078

Juha Kilponen (Contact Author)

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland
+358 10 831 2847 (Phone)
+358 10 831 2294 (Fax)

HOME PAGE: http://www.bof.fi/en/suomen_pankki/organisaatio/asiantuntijoita/kilponen_juha/

Juuso Vanhala

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

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