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Wage Posting and Business Cycles: a Quantitative Exploration

  • Giuseppe Moscarini

    (Yale University)

  • Fabien Postel-Vinay

    (University College London)

e provide a quantitative exploration of business cycles in a frictional labor market under contract-posting. The steady-state random search and wage-posting model of Burdett and Mortensen (1998) has become the canonical structural framework for empirical analysis of worker turnover and equilibrium wage dispersion. In this paper, we provide an efficient algorithm to simulate a dynamic stochastic equilibrium version of this model, the Stochastic Burdett-Mortensen model, and evaluate its performance against empirical evidence on fluctuations in unemployment, vacancies and wages. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2015.11.001
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 19 (2016)
Issue (Month): (January)
Pages: 135-160

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Handle: RePEc:red:issued:14-333
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  1. Giuseppe Moscarini & Fabien Postel-Vinay, 2014. "Did the Job Ladder Fail After the Great Recession?," Sciences Po publications info:hdl:2441/6smk3sindo9, Sciences Po.
  2. Kahn, Lisa B. & McEntarfer, Erika, 2014. "Employment Cyclicality and Firm Quality," IZA Discussion Papers 8646, Institute for the Study of Labor (IZA).
  3. Giuseppe Moscarini & Fabien Postel-Vinay, 2009. "The Timing of Labor Market Expansions: New Facts and a New Hypothesis," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 1-51 National Bureau of Economic Research, Inc.
  4. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00357751, HAL.
  5. Grégory Jolivet & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00279066, HAL.
  6. Hagedorn, Marcus & Manovskii, Iourii, 2008. "The cyclical behavior of equilibrium unemployment and vacancies revisited," Working Paper Series 0853, European Central Bank.
  7. Coles, Melvyn & Mortensen, Dale T., 2011. "Equilibrium Wage and Employment Dynamics in a Model of Wage Posting without Commitment," IZA Discussion Papers 5900, Institute for the Study of Labor (IZA).
  8. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-690, September.
  9. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  10. Giuseppe Moscarini & Fabien Postel-Vinay, 2013. "Stochastic Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1545-1581.
  11. Ljungqvist, Lars & Sargent, Thomas J, 2015. "The Fundamental Surplus in Matching Models," CEPR Discussion Papers 10489, C.E.P.R. Discussion Papers.
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  13. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-49, April.
  14. Burgess, Simon & Turon, Hélène, 2010. "Worker flows, job flows and unemployment in a matching model," European Economic Review, Elsevier, vol. 54(3), pages 393-408, April.
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  17. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
  18. Christopher Pissarides, 2007. "The unemployment volatility puzzle: is wage stickiness the answer?," LSE Research Online Documents on Economics 4460, London School of Economics and Political Science, LSE Library.
  19. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
  20. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
  21. Giovanni L. Violante & Per Krusell & Andreas Hornstein, 2006. "Frictional wage dispersion in search models: a quantitative assessment," Working Paper 06-07, Federal Reserve Bank of Richmond.
  22. Christian Bontemps & Jean-Marc Robin & Gérard J. Van den Berg, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," Post-Print hal-00357755, HAL.
  23. Daniel Borowczyk-Martins & Gregory Jolivet & Fabien Postel-Vinay, 2013. "Accounting For Endogeneity in Matching Function Estimation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 440-451, July.
  24. Giuseppe Moscarini & Fabien Postel-Vinay, 2012. "The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment," Sciences Po publications info:hdl:2441/59cr4u3mmr9, Sciences Po.
  25. Jean-Marc Robin, 2011. "On the Dynamics of unemployment and wage Distributions," Post-Print hal-01024463, HAL.
  26. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
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