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Sector-specific productivity shocks in a matching model

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  • Wesselbaum, Dennis

Abstract

Endogenous separation matching models have the shortcoming that they are barely able to replicate the Beveridge curve (i.e. the negative correlation between unemployment and vacancies) and business cycle statistics jointly. This paper builds upon the sectoral shock literature and combines its insights with the standard endogenous separation matching approach. We show that the endogenous matching model with sectoral shocks can generate an aggregate Beveridge curve and performs reasonably well in explaining business cycle facts, especially compared to the one-sector baseline model.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 6 ()
Pages: 2674-2682

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2674-2682

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Web page: http://www.elsevier.com/locate/inca/30411

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Keywords: Beveridge curve; Endogenous separations; Sectoral productivity shock;

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  12. Dennis Wesselbaum, 2009. "Firing Costs in a New Keynesian Model with Endogenous Separations," Kiel Working Papers 1550, Kiel Institute for the World Economy.
  13. Stephen Tapp, 2007. "The Dynamics of Sectoral Labour Adjustment," Working Papers 1141, Queen's University, Department of Economics.
  14. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
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