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Job search intensity and wage rigidity in business cycles

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  • Uemura, Yuki

Abstract

Search intensity, as well as the aggregate economic condition, is a crucial factor that determines unemployed workers’ success in job searches. Their search intensity is predicted to be procyclical in standard search and matching models. However, many empirical studies show that search intensity is countercyclical. This study examines the job search behavior of unemployed workers over business cycles using a search and matching model that incorporates wage rigidity and a generalized matching function. Unlike previous studies, the proposed model can generate both procyclical and countercyclical search intensities by introducing wage rigidity. This study calibrates the model to the U.S. economy and provides various impulse response analyses. The numerical exercises show that the model successfully and simultaneously reproduces countercyclical search efforts and sizable labor market fluctuations.

Suggested Citation

  • Uemura, Yuki, 2024. "Job search intensity and wage rigidity in business cycles," Journal of Macroeconomics, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:jmacro:v:82:y:2024:i:c:s0164070424000399
    DOI: 10.1016/j.jmacro.2024.103624
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    More about this item

    Keywords

    Search intensity; Business cycles; Wage rigidity; Unemployment fluctuations; Matching function;
    All these keywords.

    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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