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Creative Destruction with On-the-Job Search

  • Jean-Baptiste Michau

    (Ecole Polytechnique)

This paper studies the consequences of creative destruction on unemployment in a frictional labor market with on-the-job search. For a benchmark calibration, a 1% increase in growth raises the unemployment rate by 1.72 percentage points in the economy without on-the-job search and by only 0.07 percentage points with on-the-job search. Rather than contributing to unemployment through more frequent job separations, in the presence of on-the-job search, creative destruction induces a direct reallocation of workers from low to high productivity jobs. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2012.10.011
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 16 (2013)
Issue (Month): 4 (October)
Pages: 691-707

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Handle: RePEc:red:issued:11-119
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