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On-the-job search and the cyclical dynamics of the labor market

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Author Info
Krause, Michael
Lubik, Thomas A.

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Abstract

We show how on-the-job search and the propagation of shocks to the economy are intricately linked. Rising search by employed workers in a boom amplifies the incentives of firms to post vacancies. In turn, more vacancies induce more on-the-job search. By keeping job creation costs low for firms, on-the-job search greatly amplifies shocks. In our baseline calibration, this allows the model to generate fluctuations of unemployment, vacancies, and labor productivity whose magnitudes are close to the data, and leads output to be highly autocorrelated.

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Publisher Info
Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2007,15.

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Date of creation: 2007
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Handle: RePEc:zbw:bubdp1:6136

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Related research
Keywords: Search and matching; job-to-job mobility; worker flows; Beveridge curve; business cycle; propagation;

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Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

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References listed on IDEAS
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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    Other versions:
  3. Krause, Michael U. & Lubik, Thomas A., 2006. "The cyclical upgrading of labor and on-the-job search," Labour Economics, Elsevier, vol. 13(4), pages 459-477, August. [Downloadable!] (restricted)
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  23. Barbara Petrongolo & Christopher A. Pissarides, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June. [Downloadable!] (restricted)
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  24. Krause, Michael U. & Lubik, Thomas A., 2007. "The (ir)relevance of real wage rigidity in the New Keynesian model with search frictions," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 706-727, April. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Giuseppe Tattara & Marco Valentini, 2007. "On-the-Job Search Over the Business Cycle," Working Papers 2007_15, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
  2. Vincent Bodart & Gregory De Walque & Olivier Pierrard & Henri R. Sneessens & Raf Wouters, 2006. "Nominal Wage Rigidities in a New Keynesian Model with Frictional Unemployment," IZA Discussion Papers 2528, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Ronald Bachmann, 2005. "Labour Market Dynamics in Germany: Hirings, Separations, and Job-to-Job Transitions over the Business Cycle," SFB 649 Discussion Papers SFB649DP2005-045, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  4. Antje Berndt & Iulian Obreja, 2007. "The pricing of risk in European credit and corporate bond markets," Working Paper Series 805, European Central Bank. [Downloadable!]
  5. Guido Menzio & Shouyong Shi, 2008. "Efficient Search on the Job and the Business Cycle, Second Version," PIER Working Paper Archive 09-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Feb 2009. [Downloadable!]
  6. Robert Shimer, 2005. "The cyclicality of hires, separations, and job-to-job transitions," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 493-508. [Downloadable!]
  7. Poilly, C. & Sahuc, J-G., 2008. "Welfare Implications of Heterogeneous Labor Markets in a Currency Area," Documents de Travail 199, Banque de France. [Downloadable!]
  8. Robert E. Hall, 2005. "Job Loss, Job Finding, and Unemployment in the U.S. Economy Over the Past Fifty Years," NBER Working Papers 11678, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Luigi Landolfo, 2007. "Modeling the impact of external factors on the euro area’s HICP and real economy - a focus on pass-through and the trade balance," Working Paper Series 789, European Central Bank. [Downloadable!]
  10. Murat Tasci, 2007. "On-the-job search and labor market reallocation," Working Paper 0725, Federal Reserve Bank of Cleveland. [Downloadable!]
  11. Christopher A. Pissarides, 2007. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," CEP Discussion Papers dp0839, Centre for Economic Performance, LSE. [Downloadable!]
  12. Reinout De Bock, 2007. "Investment-Specific Technology Shocks and Labor Market Frictions," Research series 200701-01, National Bank of Belgium. [Downloadable!]
  13. Kenneth Beauchemin & Murat Tasci, 2007. "Diagnosing labor market search models: a multiple-shock approach," Working Paper 0720, Federal Reserve Bank of Cleveland. [Downloadable!]
  14. Thomas B. King, 2005. "Labor productivity and job-market flows: trends, cycles, and correlations," Supervisory Policy Analysis Working Papers 2005-04, Federal Reserve Bank of St. Louis. [Downloadable!]
  15. Meyer, Wolfgang & Gerlach, Knut, 2005. "Zusammenlegung von Arbeitslosen- und Sozialhilfe: Wirkungen auf Löhne, Beschäftigung und gewerkschaftliche Tarifpolitik (The merging of uneployment assistance and social aissistance * effects on wag," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 383-395. [Downloadable!]
  16. Thomas Lubik & Michael Krause, 2004. "A Note on Instability and Indeterminacy in Search and Matching Models," Economics Working Paper Archive 518, The Johns Hopkins University,Department of Economics. [Downloadable!]
  17. Moen, Espen R & Rosen, Asa, 2006. "Incentives in Competitive Search Equilibrium and Wage Rigidity," CEPR Discussion Papers 5554, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  18. Guido Menzio & Shouyong Shi, 2009. "Efficient Search on the Job and the Business Cycle," NBER Working Papers 14905, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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