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

ECB Working Paper No. 779

CentER Discussion Paper No. 2004-92

46 Pages Posted: 11 Nov 2004

See all articles by Michael U. Krause

Michael U. Krause

University of Cologne

Thomas A. Lubik

Johns Hopkins University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 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 increases 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 lose 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: E24, E32, J64

Suggested Citation

Krause, Michael U. and Lubik, Thomas A., On-the-Job Search and the Cyclical Dynamics of the Labor Market (July 2007). ECB Working Paper No. 779; CentER Discussion Paper No. 2004-92. Available at SSRN: https://ssrn.com/abstract=616613

Michael U. Krause (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Thomas A. Lubik

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

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