The dynamic effects of shocks to labour markets: evidence from OECD countries

Balmaseda, Manuel; Dolado, Juan J.; López‐Salido, J. David

doi:10.1093/oep/52.1.3

Cited by 47 publications

(77 citation statements)

References 7 publications

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“…Therefore, labour supply shocks have a permanent effect on the unemployment rate, which is in line with the findings by Dolado and Jimeno (1997) as well as Carstensen and Hansen (2000). Balmaseda et al (2000), on the other hand found that labour supply shocks do not have a permanent effect on the unemployment rate.…”

Section: Impulse-response Functions and Variance Decompositionsupporting

confidence: 90%

Sources of unemployment in Namibia: an application of the structural VAR approach

Sunde

Akanbi

2016

IJSE

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Abstract:The main purpose of the research was to establish the sources of unemployment in Namibia for the period 1980 to 2013 using the SVAR methodology. Empirical results show that persistently high unemployment is the result of a combination of various shocks as well as the hysteresis mechanism. The impulse response functions and variance decomposition functions agree that labour supply, aggregate demand, and real wages seem to be the critical factors affecting unemployment. Moreover, the price shocks affect unemployment in the long run and productivity shocks explain only a small fraction of the forecast error variance decomposition of unemployment in both the short run and long run. This finding is consistent with the controversy of uncertain effects of productivity shocks on the unemployment rate. Aggregate demand policies, deregulation policies and structural labour market reforms can be useful policy instruments to tackle unemployment in Namibia.

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Section: Impulse-response Functions and Variance Decompositionsupporting

confidence: 90%

Sources of unemployment in Namibia: an application of the structural VAR approach

Sunde

Akanbi

2016

IJSE

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“…Balmaseda et al, 2000, Dustmann et al, 2010, Kandil, 2010. A key issue for workers' well-being, however, is the extent to which cyclical downturns result in fluctuations in labour market earnings -that is the combined effect of changes in employment, hours worked and wages.…”

Section: Introductionmentioning

confidence: 99%

Aggregate Earnings and Macroeconomic Shocks: the Role of Labour Market Policies and Institutions

Bassanini

2012

Review of Economics and Institutions

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“…A great deal of progress has been made in recent years linking the initial focus on worker ßows (unemployment exits) to the newer literature on job ßows (job creation and destruction) 2 . Calibrated versions of these models Þt reasonably well with some labour market facts.…”

Section: Introductionmentioning

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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The dynamic effects of shocks to labour markets: evidence from OECD countries

Cited by 47 publications

References 7 publications

Sources of unemployment in Namibia: an application of the structural VAR approach

Sources of unemployment in Namibia: an application of the structural VAR approach

Aggregate Earnings and Macroeconomic Shocks: the Role of Labour Market Policies and Institutions

Worker flows, job flows and unemployment in a matching model

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