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Job Creation and Job Destruction in the Theory of Unemployment


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  • Dale T. Mortensen
  • Christopher A. Pissarides


In this paper we model a job-specific shock process in the matching model of unemployment with non-cooperative wage behaviour. We obtain endogenous job creation and job destruction processes and study their properties. We show that an aggregate shock induces negative correlation between job creation and job destruction whereas a dispersion shock induces positive correlations. The job destruction process is shown to have more volatile dynamics than the job creation process. In simulations we show that an aggregate shock process proxies reasonably well the cyclical behaviour of job creation and job destruction in the United States.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0110.

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Date of creation: May 1993
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Handle: RePEc:cep:cepdps:dp0110

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Blog mentions

As found by, the blog aggregator for Economics research:
  1. Diamond, Mortensen et Pissarides, Nobel d'économie 2010
    by Alexandre Delaigue in Econoclaste on 2010-10-11 14:49:33
  2. Više o Diamondu
    by cronomy in Cronomy on 2010-10-12 04:39:59
  3. Rethinking the labor matching function
    by Economic Logician in Economic Logic on 2009-03-13 15:14:00
  4. Nobel de economía 2010 para investigadores del desempleo
    by Marco Antonio Moreno in Elblogsalmon on 2010-10-11 16:39:00
  5. Peter A. Diamond, Dale T. Mortensen, Christopher A. Pissarides
    by jccavalcanti in on 2010-11-03 16:45:18

RePEc Biblio mentions

As found on the RePEc Biblio, the curated bibliography for Economics:
  1. > Macroeconomics > Economic Fluctuations > Real Business Cycle Theory > Labor in RBC models
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