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Investigating Differences Between the Czech and Slovak Labour Market Using a Small DSGE Model with Search and Matching Frictions

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Author Info

  • Daniel Němec

    ()
    (Masaryk University, Faculty of Economics and Administration, Department of Economics, Brno, Czech Republic)

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    Abstract

    This contribution reveals some structural properties of the Czech and Slovak labour markets. A search and matching model incorporated into a small standard DSGE model is estimated using Bayesian techniques. Two sources of rigidities are implemented: wage bargaining mechanism and “search and matching” process matching workers and firms. The results show that the search and matching aspect provides satisfactory description of employment flows in both economies, and that the institutional characteristics do not differ too much in both economies. The model estimates provide interesting evidence that wage bargaining process is determined mainly by the power of firms. These results support the view of flexible wage environment in both economies. On the other hand, firms are confronted by increasing vacancy posting costs that limit vacancies creation. Relative low separation rate provides evidence of reduced mobility of the workers.

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    Bibliographic Info

    Article provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its journal Czech Economic Review.

    Volume (Year): 7 (2013)
    Issue (Month): 1 (March)
    Pages: 021-041

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    Handle: RePEc:fau:aucocz:au2013_021

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    Related research

    Keywords: Search and matching model; closed DSGE model; Bayesian estimation; labour market flexibility;

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    1. Fabio Canova & Filippo Ferroni, 2010. "Multiple Filtering Devices for the Estimation of Cyclical DSGE Models," Working Papers 498, Barcelona Graduate School of Economics.
    2. Pavel Gertler & Matus Senaj, 2008. "Downward Wage Rigidities in Slovakia," Working and Discussion Papers WP 7/2008, Research Department, National Bank of Slovakia.
    3. Christoffel, Kai & Kuester, Keith & Linzert, Tobias, 2009. "The role of labor markets for euro area monetary policy," Working Paper Series 1035, European Central Bank.
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    5. Alberto Behar, 2009. "Tax Wedges, Unemployment Benefits and Labour Market Outcomes in the New EU Members," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(1), pages 069-092, March.
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    7. Pavel Gertler, 2010. "The wage curve: A panel data view of labour market segments," Working and Discussion Papers WP 3/2010, Research Department, National Bank of Slovakia.
    8. Janett Neugebauer & Dennis Wesselbaum, 2010. "Staggered Wages, Sticky Prices, and Labor Market Dynamics in Matching Models," Kiel Working Papers 1608, Kiel Institute for the World Economy.
    9. Thomas Lubik & Michael Krause, 2003. "The (Ir)relevance of Real Wage Rigidity in the New Keynesian Model with Search Frictions," Economics Working Paper Archive 504, The Johns Hopkins University,Department of Economics.
    10. Carlos Thomas, 2006. "Search and matching frictions and optimal monetary policy," LSE Research Online Documents on Economics 19782, London School of Economics and Political Science, LSE Library.
    11. David N. DeJong & Chetan Dave, 2007. "Introduction to Structural Macroeconometrics
      [Structural Macroeconometrics]
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