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Specific Capital and Vintage Effects on the Dynamics of Unemployment and Vacancies

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  • Burcu Eyigungor

Abstract

In a reasonably calibrated Mortensen and Pissarides matching model, shocks to average labor productivity can account for a small portion of the fluctuations in unemployment and vacancies (Shimer (2005)). I add heterogeneity in jobs (matches) with respect to the time the job is created in the form of different embodied technology levels. I also introduce specific capital that, once adapted for a match, has less value in another match. I show that the augmented model can account for fluctuations in unemployment and vacancies, and that specific capital is important to decreasing the volatility of the destruction rate of existing matches.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 3 (June)
Pages: 1214-37

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:3:p:1214-37

Note: DOI: 10.1257/aer.100.3.1214
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References

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  3. James S. Costain & Michael Reiter, 2003. "Business Cycles, Unemployment Insurance, and the Calibration of Matching Models," CESifo Working Paper Series 1008, CESifo Group Munich.
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Citations

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Cited by:
  1. Björn van Roye & Dennis Wesselbaum, 2009. "Capital, Endogenous Separations, and the Business Cycle," Kiel Working Papers 1561, Kiel Institute for the World Economy.
  2. Christopher A. Pissarides, 2006. "Unemployment and Hours of Work: The North Atlantic Divide Revisited," CEP Discussion Papers dp0757, Centre for Economic Performance, LSE.
  3. Anton A. Cheremukhin, 2011. "Labor matching: putting the pieces together," Working Papers 1102, Federal Reserve Bank of Dallas.
  4. Steven J. Davis & Till M. von Wachter, 2011. "Recessions and the Cost of Job Loss," NBER Working Papers 17638, National Bureau of Economic Research, Inc.
  5. Christopher A. Pissarides, 2009. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," Econometrica, Econometric Society, vol. 77(5), pages 1339-1369, 09.
  6. Martin Gervais & Nir Jaimovich & Henry E. Siu & Yaniv Yedid-Levi, 2013. "Technological Learning and Labor Market Dynamics," NBER Working Papers 19767, National Bureau of Economic Research, Inc.
  7. Venky Venkateswaran, 2011. "Heterogeneous Information and Labor Market Fluctuations," 2011 Meeting Papers 1292, Society for Economic Dynamics.
  8. Alejandro Justiniano & Claudio Michelacci, 2011. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the United States and Europe," NBER Chapters, in: NBER International Seminar on Macroeconomics 2011, pages 169-235 National Bureau of Economic Research, Inc.
  9. Alejandro Justiniano & Claudio Michelacci, 2011. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe," NBER Working Papers 17429, National Bureau of Economic Research, Inc.

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