Job Selection and Wages over the Business Cycle

Hagedorn, Marcus; Manovskii, Iourii

doi:10.1257/aer.103.2.771

Cited by 111 publications

(110 citation statements)

References 38 publications

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“…Wages are, in particular, independent from past unemployment rates. In that sense, this paper is closer to the search model of Hagedorn and Manovskii (2013) in which wages only depend on current conditions, but in which the dynamic matching of workers with firms over the business cycle leads to a dynamic selection of jobs consistent with the above results.…”

Section: F3 Relationship To Implicit Contract Literaturesupporting

confidence: 71%

“…These results were later criticized by Hagedorn and Manovskii (2013) who argued that such dependence of wages on past unemployment rates could be driven by selection and was consistent with a search model where wages depended solely on current labor market conditions. They showed, in particular, that past unemployment rates were a proxy for match quality and that using better measures of match quality virtually eradicated the dependence on past unemployment rates.…”

Section: F3 Relationship To Implicit Contract Literaturementioning

confidence: 80%

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Uncertainty and Unemployment

Schaal¹

2017

Econometrica

190

107

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This paper studies the impact of time‐varying idiosyncratic risk at the establishment level on unemployment fluctuations over 1972–2009. I build a tractable directed search model with firm dynamics and time‐varying idiosyncratic volatility. The model allows for endogenous separations, entry and exit, and job‐to‐job transitions. I show that the model can replicate salient features of the microeconomic behavior of firms and that the introduction of volatility improves the fit of the model for standard business cycle moments. In a series of counterfactual experiments, I show that time‐varying risk is important to account for the magnitude of fluctuations in aggregate unemployment for past U.S. recessions. Though the model can account for about 40% of the total increase in unemployment for the 2007–2009 recession, uncertainty alone is not sufficient to explain the magnitude and persistence of unemployment during that episode.

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Section: F3 Relationship To Implicit Contract Literaturesupporting

confidence: 71%

Section: F3 Relationship To Implicit Contract Literaturementioning

confidence: 80%

Uncertainty and Unemployment

Schaal¹

2017

Econometrica

190

107

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“…In contrast to their results for the US, these authors find strong and persistent 4 Recently Hagedorn and Manovskii (2013) criticize this interpretation. They argue that wages are still determined by spot markets and not by long-term implicit contracts.…”

Section: Literature Reviewmentioning

confidence: 73%

Scars of recessions in a rigid labor market

Cockx

Ghirelli

2016

Labour Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Scars of Recessions in a Rigid Labor Market AbstractWe study the impact of graduating in a recession in Flanders (Belgium), i.e. in a rigid labor market. In the presence of a high minimum wage, a typical recession hardly influences the hourly wage of low educated men, but reduces working time and earnings by about 4.5% up to twelve years after graduation. For the high educated, the working time is not persistently affected, but the penalty on the hourly wage (and earnings) increases with experience, and attains roughly -6% ten years after labor market entry. We also contribute to the literature on inference with few clusters.

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“…19 Notice that vector Ω in the equilibrium definition in section 2.6 included the last T realization of the aggregate shocks. 20 For a detailed application of the Reiter method, see Costain and Nakov (2011).…”

mentioning

confidence: 99%

The Cyclical Behavior of Unemployment and Wages under Information Frictions

Morales-Jiménez

2017

FEDS

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I propose a new mechanism for sluggish wages based on workers' noisy information about the state of the economy. Wages do not respond immediately to a positive aggregate shock because workers do not (yet) have enough information to demand higher wages. This increases firms' incentives to post more vacancies, which makes unemployment volatile and sensitive to aggregate shocks. The model is robust to two major criticisms of existing theories of sluggish wages and volatile unemployment: flexibility of wages for new hires and pro-cyclicality of the opportunity cost of employment. Calibrated to U.S. data, the model explains 70% of unemployment volatility. * I am especially grateful to Boragan Aruoba, Luminita Stevens, John Haltiwanger, and John Shea for their valuable suggestions and support. I would also like to thank

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Job Selection and Wages over the Business Cycle

Cited by 111 publications

References 38 publications

Uncertainty and Unemployment

Uncertainty and Unemployment

Scars of recessions in a rigid labor market

The Cyclical Behavior of Unemployment and Wages under Information Frictions

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