Shocks and Institutions in a Job Matching Model

Haan, Wouter J. Den; Hæfke, Christian; Ramey, Garey

doi:10.2139/ssrn.311447

Cited by 11 publications

(13 citation statements)

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“…12 These data are used to produce series for hours of work per person aged 15-64 across sectors in 1956 and 2000. 13 A few remarks are in order regarding the construction of these statistics. For 2000 there data on hours by sector for all countries.…”

Section: Labor Input Across Sectorsmentioning

confidence: 99%

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Structural Transformation and the Deterioration of European Labor Market Outcomes

Rogerson

2008

Journal of Political Economy

239

152

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This paper examines hours worked in continental Europe and the United States from 1956 to 2003. The empirical work establishes two results. First, hours worked in Europe decline by almost 45 percent compared to the United States over this period. Second, this decline is almost entirely accounted for by the fact that Europe develops a much smaller market service sector than the United States. A simple model of time allocation is used to understand these patterns. I find that relative increases in taxes and technological catch-up can account for most of the differences between the European and American time allocations over this period. (c) 2008 by The University of Chicago. All rights reserved..

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Section: Labor Input Across Sectorsmentioning

confidence: 99%

“…The data for 2000 come from the 60 Sector Data Base, and the data for 1956 come from the 10 Sector Data Base 13. In these calculations I have included construction in the service sector.…”

mentioning

confidence: 99%

Structural Transformation and the Deterioration of European Labor Market Outcomes

Rogerson

2008

Journal of Political Economy

239

152

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“…The Þrm anticipates having to pay advertising costs when the worker quits, so would be worse off if the search decision did not affect the wage rate. However, because the Nash bargaining leads to a lower wage when the worker searches on the job, the Þrm is in fact better off if the worker does search as the wage difference more than offsets the anticipated advertising costs 16 . Furthermore, Þrms cannot afford to retain workers who have an outside offer in hand: as the new job's & is unobserved until the worker actually starts in the new job, the minimum wage that the old Þrm would have to pay to retain the worker is a wage that matches the expected wage E V {w} that the worker anticipates.…”

Section: Surplus and Wage Bargainingmentioning

confidence: 99%

Worker flows, job flows and unemployment in a matching model

Burgess

Turon

2010

European Economic Review

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Standard matching models of unemployment assume that workers and job ßows are identical. This is in stark contrast to empirical evidence that job ßows in fact only account for a fraction of worker ßows, that unemployment exits only account for a fraction of hires and that these fractions vary over the cycle. In this paper, we develop and calibrate a model based on the Mortensen and Pissarides approach but that emphasises this issue.We show that this matters -that it has very different implications for our view of unemployment dynamics.The key features of our model relate to the search options of the worker, and the job creation decision by Þrms. We allow workers to search whilst employed, and Þrms to re-advertise jobs that have been quit from. This leads us to use a different job creation process, whereby potential vacancies, or job 'ideas', arise at a Þnite rate per period over a range of idiosyncratic productivities. In the standard setting, there is an unlimited supply of potential vacancies at the top idiosyncratic productivity.The main results are as follows. First, the presence of on-the-job search has a substantial impact on labour market equilibrium, whereby equilib- * An earlier version of this paper was called "Unemployment equilibrium and on-the-job search". 1 rium unemployment is lower and exhibits a higher turnover rate. On-thejob search renders the unemployment inßow rate more sensitive to the cycle: in all cases, the inßow rate is found to be more cyclically sensitive than the outßow rate, suggesting that most unemployment dynamics occur through this channel. This conÞrms empirical results for Great Britain (Burgess and Turon (2005)). Second, our model offers some insight into a (two-way) relationship between job-to-job ßows, which drives the difference between worker and job ßows, and the extent of wage dispersion. More wage dispersion increases the incentive to search on-the-job and more on-the-job search widens the range of viable productivities and leads to lower wages at the bottom of the wage distribution, thereby increasing wage dispersion.Third, changes in the model's exogenous parameters impact unemployment to a considerable degree by changing the level of employed job search.

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“…Since in this non-competitive labor market individual wages are linked to individual output, this acceleration then also raises wage dispersion even among ex-ante equal workers, i.e., it raises the return to luck. 69 As in Jovanovic (1998), however, if the scrapping age of capital is endogenous, the model would display an offsetting force. This force is due to the fact that, when the growth rate is higher, machines become obsolete faster, and firms scrap machines earlier.…”

Section: Technological Heterogeneity and The Returns To Luckmentioning

confidence: 99%

The Effects of Technical Change on Labor Market Inequalities

Hornstein

Krusell

Violante

2005

Handbook of Economic Growth

124

118

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In this chapter we inspect economic mechanisms through which technological progress shapes the degree of inequality among workers in the labor market. A key focus is on the rise of U.S. wage inequality over the past 30 years. However, we also pay attention to how Europe did not experience changes in wage inequality but instead saw a sharp increase in unemployment and an increased labor share of income, variables that remained stable in the U.S. We hypothesize that these changes in labor market inequalities can be accounted for by the wave of capital-embodied technological change, which we also document. We propose a variety of mechanisms based on how technology increases the returns to education, ability, experience, and "luck" in the labor market. We also discuss how the wage distribution may have been indirectly influenced by technical change through changes in certain aspects of the organization of work, such as the hierarchical structure of firms, the extent of unionization, and the degree of centralization of bargaining. To account for the U.S.-Europe differences, we use a theory based on institutional differences between the United States and Europe, along with a common acceleration of technical change. Finally, we briefly comment on the implications of labor market inequalities for welfare and for economic policy.

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Shocks and Institutions in a Job Matching Model

Cited by 11 publications

References 1 publication

Structural Transformation and the Deterioration of European Labor Market Outcomes

Structural Transformation and the Deterioration of European Labor Market Outcomes

Worker flows, job flows and unemployment in a matching model

The Effects of Technical Change on Labor Market Inequalities

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