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The separation rate cannot be exogenous

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  • Ben-David Nissim

Abstract

Many articles that used the matching frame model considered the separation rate as an exogenous variable and concentrated on the matching process. This assumption is inconsistent with the findings of many empirical studies, which indicate that business cycles are driven primarily by changes in the separation rate. This study demonstrates that, within the matching frame model, given uncertain productivity of newly employed workers the separation rate cannot be constant. Any change in the asset value of occupied jobs will lead to a change of the separation rate.

Suggested Citation

  • Ben-David Nissim, 2005. "The separation rate cannot be exogenous," Applied Economics Letters, Taylor & Francis Journals, vol. 12(15), pages 949-951.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:15:p:949-951
    DOI: 10.1080/13504850500377918
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    References listed on IDEAS

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    1. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186, National Bureau of Economic Research, Inc.
    2. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-979, December.
    3. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
    4. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
    5. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    6. Pissarides, C A, 1984. "Efficient Job Rejection," Economic Journal, Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen.
    7. Mortensen, Dale T, 1999. "Equilibrium Unemployment Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 889-914, November.
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    Cited by:

    1. Shigeru Fujita & Garey Ramey, 2007. "Reassessing the Shimer facts," Working Papers 07-2, Federal Reserve Bank of Philadelphia.

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