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Equilibrium Unemployment

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Listed:
  • Joao Gomes
  • Jeremy Greenwood
  • Sergio Rebelo

Abstract

A search-theoretic general equilibrium model of frictional unemployment is shown to be consistent with some of the key regularities of unemployment over the business cycle. In the model the return to a job moves stochastically. Agents can choose either to quit and search for a better job, or continue working. Search generates job offers that agents can accept or reject. Two distinguishing features of current work relative to the existing business cycle literature on labor market fluctuations are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) there is imperfect insurance against unemployment.

Suggested Citation

  • Joao Gomes & Jeremy Greenwood & Sergio Rebelo, 1997. "Equilibrium Unemployment," NBER Working Papers 5922, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5922
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D3 - Microeconomics - - Distribution

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