Aggregate Labor Market Dynamics in Hong Kong

Posted: 14 Jul 2021

See all articles by Thomas Lubik

Thomas Lubik

Federal Reserve Banks - Federal Reserve Bank of Richmond

Multiple version iconThere are 2 versions of this paper

Date Written: 2011

Abstract

I specify a simple search and matching model of the labor market and estimate it on unemployment and vacancy data for Hong Kong over the period 2000-2010 using Bayesian methods. The model fits the data remarkably well. The estimation shows that the main driver of fluctuations in the labor market are productivity shocks, with cyclical movements in the separation rate playing only a subordinate role. The parameter estimates are broadly consistent with those found in the literature. In order to replicate the volatility of unemployment and vacancies the model estimates require a high replacement ratio and a low bargaining power for workers in addition to two extraneous sources of uncertainty. The estimates are robust to a relaxation of the prior information and small changes in the underlying model specification, which suggests that the data are informative and that the model is well specified. Overall, the Hong Kong labor market can be characterised by having a low degree of churning in normal times, but rapid firings and hirings in recessions and expansions.

Suggested Citation

Lubik, Thomas, Aggregate Labor Market Dynamics in Hong Kong (2011). Available at SSRN: https://ssrn.com/abstract=3886214

Thomas Lubik (Contact Author)

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

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

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