Job Heterogeneity and Aggregate Labor Market Fluctuations

55 Pages Posted: 5 Feb 2019

See all articles by Pawel Michal Krolikowski

Pawel Michal Krolikowski

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Date Written: February 1, 2019

Abstract

This paper disciplines a model with search over match quality using microeconomic evidence on worker mobility patterns and wage dynamics. In addition to capturing these individual data, the model provides an explanation for aggregate labor market patterns. Poor match quality among first jobs implies large fluctuations in unemployment due to a responsive job destruction margin. Endogenous job destruction generates a burst of layoffs at the onset of a recession and, together with on-the-job search, generates a negative comovement between unemployment and vacancies. A significant job ladder, consistent with the empirical wage dispersion, provides ample scope for the propagation of vacancies and unemployment.

Keywords: unemployment, job destruction, amplification, match-quality

JEL Classification: E24, E32, J63, J64

Suggested Citation

Krolikowski, Pawel Michal, Job Heterogeneity and Aggregate Labor Market Fluctuations (February 1, 2019). FRB of Cleveland Working Paper No. 19-04, Available at SSRN: https://ssrn.com/abstract=3328878 or http://dx.doi.org/10.2139/ssrn.3328878

Pawel Michal Krolikowski (Contact Author)

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

East 6th & Superior
Cleveland, OH 44101-1387
United States

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