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Unemployment fluctuations over the life cycle

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  • Hairault, Jean-Olivier
  • Langot, Francois
  • Sopraseuth, Thepthida

Abstract

In this paper, we show that (i) the volatility of worker flows increases with age in US CPS data, and (ii)a search and matching model with life-cycle features, endogenous separation and search effort, is well suited to explain this fact. With a shorter horizon on the labor market, older workers’ outside options become less responsive to new employment opportunities, thereby making their wages less sensitive to the business cycle. Their job finding and separation rates are then more volatile along the business cycle. The horizon effect cannot explain the significant differences between prime-age and young workers as both age groups are far away from retirement. A lower bargaining power on the youth labor market brings the model closer to the data.

Suggested Citation

  • Hairault, Jean-Olivier & Langot, Francois & Sopraseuth, Thepthida, 2019. "Unemployment fluctuations over the life cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 100(C), pages 334-352.
    • Handle: RePEc:eee:dyncon:v:100:y:2019:i:c:p:334-352
    DOI: 10.1016/j.jedc.2019.01.001
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    Cited by:

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    3. Arnaud Chéron & Anthony Terriau, 2024. "Training and Job-to-Job Mobility with Transfer Fees," TEPP Working Paper 2024-09, TEPP.

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    More about this item

    Keywords

    Search; Matching; Business cycle; Life cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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