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Search in Macroeconomic Models of the Labor Market

In: Handbook of Labor Economics

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  • Rogerson, Richard
  • Shimer, Robert

Abstract

This chapter assesses how models with search frictions have shaped our understanding of aggregate labor market outcomes in two contexts: business cycle fluctuations and long-run (trend) changes. We first consolidate data on aggregate labor market outcomes for a large set of OECD countries. We then ask how models with search improve our understanding of these data. Our results are mixed. Search models are useful for interpreting the behavior of some additional data series, but search frictions per se do not seem to improve our understanding of movements in total hours at either business cycle frequencies or in the long-run. Still, models with search seem promising as a framework for understanding how different wage setting processes affect aggregate labor market outcomes.

Suggested Citation

  • Rogerson, Richard & Shimer, Robert, 2011. "Search in Macroeconomic Models of the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 7, pages Pages: 61, Elsevier.
    • Handle: RePEc:eee:labchp:4-07
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    Keywords

    Search; Unemployment; Worker flows; Business cycle; Cross-country comparisons; Wages;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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