Hiring Freeze and Bankruptcy in Unemployment Dynamics
AbstractThis paper proposes a matching model that distinguishes between job creation by existing firms and job creation by firm entrants. The paper argues that vacancy posting and job destruction on the extensive margin, i.e. from firms that enter and exit the labour market, represents a potentially viable mechanism for understanding the cyclical properties of vacancies and unemployment. The model features both hiring freeze and bankruptcies, where the former represents a sudden shut down of vacancy posting at the firm level with labour downsizing governed by natural turnover. A bankrupt firm, conversely, shut down its vacancies and lay offs its stock of workers. Recent research in macroeconomics has shown that a calibration of the Mortensen and Pissarides matching model account for 10 percent of the cyclical variability of the vacancy unemployment ratio displayed by U.S. data. A calibration of the model that explicitly considers hiring freeze and bankruptcy can account for 20 to 35 percent of the variability displayed by the data
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 227.
Date of creation: 03 Dec 2006
Date of revision:
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
unemployment dynamics; matching models;
Other versions of this item:
- Garibaldi, Pietro, 2006. "Hiring Freeze and Bankruptcy in Unemployment Dynamics," CEPR Discussion Papers 5835, C.E.P.R. Discussion Papers.
- Garibaldi, Pietro, 2006. "Hiring Freeze and Bankruptcy in Unemployment Dynamics," IZA Discussion Papers 2263, Institute for the Study of Labor (IZA).
- Pietro Garibaldi, 2006. "Hiring Freeze and Bankruptcy in Unemployment Dynamics," Carlo Alberto Notebooks 7, Collegio Carlo Alberto.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-13 (All new papers)
- NEP-DGE-2007-01-13 (Dynamic General Equilibrium)
- NEP-ENT-2007-01-13 (Entrepreneurship)
- NEP-LAB-2007-01-13 (Labour Economics)
- NEP-MAC-2007-01-13 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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American Economic Review,
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22689, University Library of Munich, Germany.
- Lisi GAETANO, 2010. "The Unemployment Volatility Puzzle: The Role Of The Underground Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 59-69.
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