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On the cyclicality of unemployment: Resurrecting the participation margin

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  • Ebell, Monique

Abstract

This paper considers a real business cycle model with search frictions in the labor market and labor supply which is elastic along the participation margin. Previous authors have found that such models generate counterfactually procyclical unemployment and a positively sloped Beveridge curve. This paper presents a calibrated model which succeeds at generating countercyclical unemployment and a negatively sloped Beveridge curve, despite the presence of a participation margin.

Suggested Citation

  • Ebell, Monique, 2011. "On the cyclicality of unemployment: Resurrecting the participation margin," Labour Economics, Elsevier, vol. 18(6), pages 822-836.
  • Handle: RePEc:eee:labeco:v:18:y:2011:i:6:p:822-836
    DOI: 10.1016/j.labeco.2011.06.006
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Elsby, Michael W.L. & Hobijn, Bart & Şahin, Ayşegül, 2015. "On the importance of the participation margin for labor market fluctuations," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 64-82.
    2. Wei Cui & Sören Radde, 2014. "Search-Based Endogenous Illiquidity and the Macroeconomy," Discussion Papers of DIW Berlin 1367, DIW Berlin, German Institute for Economic Research.
    3. Christian Merkl & Sanjay K. Chugh, 2011. "Efficiency and Labor Market Dynamics in a Model of Labor Selection," 2011 Meeting Papers 824, Society for Economic Dynamics.
    4. Per Krusell & Toshihiko Mukoyama & Richard Rogerson & Ayşegül Şahin, 2017. "Gross Worker Flows over the Business Cycle," American Economic Review, American Economic Association, vol. 107(11), pages 3447-3476, November.
    5. Elsby, Michael & Hobijn, Bart & Sahin, Aysegül, 2013. "On the Importance of the Participation Margin for Market Fluctuations," Working Paper Series 2013-05, Federal Reserve Bank of San Francisco.
    6. repec:wly:iecrev:v:57:y:2016:i::p:1371-1404 is not listed on IDEAS
    7. Didem Tuzemen, 2012. "Labor market dynamics with endogenous labor force participation and on-the-job search," Research Working Paper RWP 12-07, Federal Reserve Bank of Kansas City.
    8. Tüzemen, Didem, 2017. "Labor market dynamics with endogenous labor force participation and on-the-job search," Journal of Economic Dynamics and Control, Elsevier, vol. 75(C), pages 28-51.
    9. Michael W. L. Elsby & Ryan Michaels & David Ratner, 2015. "The Beveridge Curve: A Survey," Journal of Economic Literature, American Economic Association, vol. 53(3), pages 571-630, September.
    10. A. Devulder, 2014. "Heterogeneity, Unemployment Benefits and Voluntary Labor Force Participation," Working papers 493, Banque de France.

    More about this item

    Keywords

    Search; Business cycles; Labor market participation;

    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
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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