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A Competitive Theory of Employment Dynamics

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  • Randall Gouge
  • Ian King

Abstract

We develop a model of search and unemployment in an economy consisting of a large number of spatially separated local competitive labour markets and aggregate uncertainty. If aggregate shocks are positively autocorrelated, the implied cyclical behaviour of the aggregate variables match those of empirical studies: worker movement and job creation are procyclical while total unemployment, job destruction and job reallocation are countercyclical.

Suggested Citation

  • Randall Gouge & Ian King, 1997. "A Competitive Theory of Employment Dynamics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(1), pages 1-122.
    • Handle: RePEc:oup:restud:v:64:y:1997:i:1:p:1-122.
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    File URL: http://hdl.handle.net/10.2307/2971738
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    Citations

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    Cited by:

    1. Ian King & Arthur Sweetman, 2002. "Procyclical Skill Retooling and Equilibrium Search," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(3), pages 704-717, July.
    2. John Kennes, 2006. "Competitive Auctions: Theory and Application," Contributions to Economic Analysis, in: Structural Models of Wage and Employment Dynamics, pages 145-168, Emerald Group Publishing Limited.
    3. Fabrice Collard & Jacob Wong, 2011. "A Dynamic Model of Occupational Mobility, Structural Unemployment, Average Labour Productivity and Wage Dispersion," 2011 Meeting Papers 821, Society for Economic Dynamics.
    4. Carlos Carrillo‐Tudela & Ludo Visschers, 2023. "Unemployment and Endogenous Reallocation Over the Business Cycle," Econometrica, Econometric Society, vol. 91(3), pages 1119-1153, May.
    5. Carrillo-Tudela, Carlos & Visschers, Ludo, 2014. "Unemployment and Endogenous Reallocation over the Business Cycle," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-35, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Anja Bauer & Ian King, 2015. "The Hartz Reforms, the German Miracle, and the Reallocation Puzzle," Discussion Papers Series 550, School of Economics, University of Queensland, Australia.
    7. Kilponen, Juha, 2000. "On the Efficiency of Job and Income Protection in the Dynamic Labour Markets," Discussion Papers 219, VATT Institute for Economic Research.
    8. Bauer, Anja & King, Ian, 2018. "The Hartz reforms, the German Miracle, and labor reallocation," European Economic Review, Elsevier, vol. 103(C), pages 1-17.
    9. Fernando Alvarez & Robert Shimer, 2011. "Search and Rest Unemployment," Econometrica, Econometric Society, vol. 79(1), pages 75-122, January.
    10. repec:eee:labchp:v:3:y:1999:i:pc:p:2985-3028 is not listed on IDEAS
    11. Bauer, Anja, 2015. "Reallocation patterns across occupations," IAB-Discussion Paper 201526, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. Jacob Wong, 2012. "Aggregate Reallocation Shocks and the Dynamics of Occupational Mobility and Wage Inequality," School of Economics and Public Policy Working Papers 2012-04, University of Adelaide, School of Economics and Public Policy.
    13. Paul Dalziel & Ross Cullen & Caroline Saunders, 2002. "Ranking research records of economics departments in New Zealand: Comment," New Zealand Economic Papers, Taylor & Francis Journals, vol. 36(1), pages 113-122.
    14. Maximiliano Dvorkin, 2013. "Sectoral Shocks, Reallocation and Unemployment in a Model of Competitive Labor Markets," 2013 Meeting Papers 1229, Society for Economic Dynamics.
    15. Herz, Benedikt, 2017. "Specific Human Capital and Wait Unemployment," MPRA Paper 76777, University Library of Munich, Germany.
    16. Jacob Wong, 2017. "Aggregate Reallocation Shocks, Occupational Employment and Distance," School of Economics and Public Policy Working Papers 2017-09, University of Adelaide, School of Economics and Public Policy.
    17. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS

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