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On the Job Search and Business Cycles

Author

Listed:
  • Giuseppe Moscarini
  • Fabien Postel-Vinay

Abstract

We propose a highly tractable way of analyzing business cycles in an environment with random job search both off- and on-the-job (OJS). Heterogeneity in productivity across jobs generates a job ladder. Firms Bertrand-compete for employed workers, as in the Sequential Auctions protocol of Postel-Vinay and Robin [2002]. We identify three channels through which OJS amplifies and propagates aggregate shocks: 1) a higher estimated elasticity of the matching function when allowing for OJS; 2) the differential returns to hiring employed and unemployed job applicants, whose proportions naturally vary over the business cycle; 3) the slow reallocation of workers through OJS across rungs of the job ladder, generating endogenous, slowly evolving opportunities for further poaching, which feed back on job creation incentives. JEL Codes: J64, J31, D86.

Suggested Citation

  • Giuseppe Moscarini & Fabien Postel-Vinay, 2024. "On the Job Search and Business Cycles," Revue économique, Presses de Sciences-Po, vol. 75(1), pages 73-112.
    • Handle: RePEc:cai:recosp:reco_751_0073
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    Cited by:

    1. is not listed on IDEAS
    2. Shigeru Fujita & Giuseppe Moscarini & Fabien Postel-Vinay, 2024. "Measuring Employer-to-Employer Reallocation," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(3), pages 1-51, July.
    3. Guyonne Kalb & Jordy Meekes, 2021. "Wage Growth Distribution and Changes over Time: 2001–2018," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 76-93, March.
    4. Bobeica, Elena & Koester, Gerrit & Lis, Eliza & Nickel, Christiane & Porqueddu, Mario, 2019. "Understanding low wage growth in the euro area and European countries," Occasional Paper Series 232, European Central Bank.
    5. Clémence Berson & Marta De Philippis & Eliana Viviano, 2020. "Job-to-job flows and wage dynamics in France and Italy," Questioni di Economia e Finanza (Occasional Papers) 563, Bank of Italy, Economic Research and International Relations Area.
    6. Guyonne Kalb & Jordy Meekes, 2019. "Wage Growth Distribution and Decline among Individuals: 2001-2017," RBA Annual Conference Papers acp2019-03, Reserve Bank of Australia, revised Jul 2019.

    More about this item

    Keywords

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    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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