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Comparative advantage and unemployment

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Author Info

  • Bils, Mark
  • Chang, Yongsung
  • Kim, Sun-Bin

Abstract

Worker heterogeneity in productivity and labor supply is introduced into a matching model. Workers who earn high wages and work high-hours are identified as those with strong market comparative advantage—high rents from being employed. The model is calibrated to match separation, job finding, and employment in the SIPP data. The model predicts a big drop in employment for workers with weak comparative advantage during recessions. But the data show that workers with strong comparative advantage also display sizable employment fluctuations, implying that aggregate employment fluctuations are not explained by the responses of workers with small rents to employment.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 59 (2012)
Issue (Month): 2 ()
Pages: 150-165

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Handle: RePEc:eee:moneco:v:59:y:2012:i:2:p:150-165

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Web page: http://www.elsevier.com/locate/inca/505566

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Citations

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Cited by:
  1. Andres Erosa & Luisa Fuster & Gueorgui Kambourov, 2011. "Towards a Micro-Founded Theory of Aggregate Labor Supply," Working Papers tecipa-443, University of Toronto, Department of Economics.
  2. Gabriel Chodorow-Reich & Loukas Karabarbounis, 2014. "The Cyclicality of the Opportunity Cost of Employment," Working Paper 126541, Harvard University OpenScholar.
  3. Chassamboulli, Andri, 2013. "Labor-market volatility in a matching model with worker heterogeneity and endogenous separations," Labour Economics, Elsevier, vol. 24(C), pages 217-229.
  4. Michael Elsby & Bart Hobjin & Aysegül Sahin, 2010. "The labor market in the Great Recession," Working Paper Series 2010-07, Federal Reserve Bank of San Francisco.
  5. Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2012. "Does Indivisible Labor Explain the Difference between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities," NBER Chapters, in: NBER Macroeconomics Annual 2012, Volume 27, pages 1-56 National Bureau of Economic Research, Inc.
  6. Mueller, Andreas I., 2012. "Separations, Sorting and Cyclical Unemployment," IZA Discussion Papers 6849, Institute for the Study of Labor (IZA).
  7. Makoto Nakajima, 2012. "Business Cycles In The Equilibrium Model Of Labor Market Search And Self‐Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 399-432, 05.
  8. Michael Dotsey & Wenli Li & Fang Yang, 2010. "Consumption and time use over the life cycle," Working Papers 10-37, Federal Reserve Bank of Philadelphia.
  9. Wenli Li & Fang Yang & Michael Dotsey, 2010. "Consumption and Home Production over the Life Cycle," 2010 Meeting Papers 423, Society for Economic Dynamics.
  10. José Mustre-del-Río, 2011. "The aggregate implications of individual labor supply heterogeneity," Research Working Paper RWP 11-09, Federal Reserve Bank of Kansas City.

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