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The cyclical behavior of job creation and job destruction: A sectoral model

Author

Listed:
  • Jeremy Greenwood

    (Department of Economics, University of Rochester, NY 14627-0156, USA)

  • Glenn M. MacDonald

    (W.E. Simon Graduate School of Business Administration and Department of Economics, University of Rochester, NY 14627-0156, USA)

  • Guang-Jia Zhang

    (Department of Economics, University of Rochester, NY 14627-0156, USA, and Department of Economics, University of Guelph, Guelph N1G 2W1, CANADA)

Abstract

Three key features of the employment process in the U.S. economy are that job creation is procyclical, job destruction is countercyclical, and job creation is less volatile than job destruction. These features are also found at the sectoral (goods and services) level. The paper develops, calibrates and simulates a two-sector general equilibrium model that includes both aggregate and sectoral shocks. The behavior of the model economy mimics the job creation and destruction facts. A non-negligible amount of unemployment arises due to the presence of aggregate and sectoral shocks.

Suggested Citation

  • Jeremy Greenwood & Glenn M. MacDonald & Guang-Jia Zhang, 1995. "The cyclical behavior of job creation and job destruction: A sectoral model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(1), pages 95-112.
    • Handle: RePEc:spr:joecth:v:7:y:1995:i:1:p:95-112
    Note: Received: March 20, 1994; revised version September 12, 1994
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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