On-the-Job Search and the Cyclical Dynamics of the Labor Market

60 Pages Posted: 8 Jun 2016

See all articles by Michael U. Krause

Michael U. Krause

University of Cologne

Thomas Lubik

Federal Reserve Banks - Federal Reserve Bank of Richmond

Multiple version iconThere are 3 versions of this paper

Date Written: 2007

Abstract

We show how on-the-job search and the propagation of shocks to the economy are intricately linked. Rising search by employed workers in a boom amplifies the incentives of firms to post vacancies. In turn, more vacancies induce more on-the-job search. By keeping job creation costs low for firms, on-the-job search greatly amplifies shocks. In our baseline calibration, this allows the model to generate fluctuations of unemployment, vacancies, and labor productivity whose magnitudes are close to the data, and leads output to be highly autocorrelated.

Keywords: Search and matching, job-to-job mobility, worker flows, Beveridge curve, business cycle, propagation

JEL Classification: J64, E32, E24

Suggested Citation

Krause, Michael U. and Lubik, Thomas, On-the-Job Search and the Cyclical Dynamics of the Labor Market (2007). Bundesbank Series 1 Discussion Paper No. 2007,15. Available at SSRN: https://ssrn.com/abstract=2785290

Michael U. Krause (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Thomas Lubik

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
37
Abstract Views
284
PlumX Metrics