IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v57y2025i45p7319-7331.html
   My bibliography  Save this article

A note on the labour market volatility puzzle: the role of endogenous participation

Author

Listed:
  • Lifang Xu

Abstract

This article studies the effects of endogenous participation of marginally attached workers on wage dynamics and hence on the unemployment fluctuations in a stylized search theoretic model. It shows that endogenous participation of these workers induces a countercyclical component in the wage equation under Nash bargaining. As a result, the elasticity of wage with respect to productivity becomes smaller and hence the model can generate larger unemployment fluctuations, compared to the textbook model. With careful calibration, I show that the model well captures the wage dynamics and can explain the unemployment and job openings volatility reasonably well.

Suggested Citation

  • Lifang Xu, 2025. "A note on the labour market volatility puzzle: the role of endogenous participation," Applied Economics, Taylor & Francis Journals, vol. 57(45), pages 7319-7331, September.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:45:p:7319-7331
    DOI: 10.1080/00036846.2024.2388310
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2024.2388310
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2024.2388310?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:57:y:2025:i:45:p:7319-7331. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.