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Structural Unemployment

  • Benedikt Herz and Thijs van Rens

Structural unemployment is due to mismatch between available jobs and workers. We formalize this concept in a simple model of a segmented labor market with search frictions within segments. Worker mobility, job mobility and wage bargaining costs across segments generate structural unemployment. We estimate the contribution of these costs to fluctuations in US unemployment, operationalizing segments as states or industries. Most structural unemployment is due to wage bargaining costs, which are large but nevertheless contribute little to unemployment fluctuations. Structural unemployment is as cyclical as overall unemployment and no more persistent, both in the current and in previous recessions.

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File URL: http://research.barcelonagse.eu/tmp/working_papers/568.pdf
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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 568.

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Date of creation: Jul 2011
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Handle: RePEc:bge:wpaper:568
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  1. Dale T. Mortensen, 2005. "More on Unemployment and Vacancy Fluctuations," 2005 Meeting Papers 326, Society for Economic Dynamics.
  2. Regis Barnichon & Andrew Figura, 2010. "What drives movements in the unemployment rate? a decomposition of the Beveridge curve," Finance and Economics Discussion Series 2010-48, Board of Governors of the Federal Reserve System (U.S.).
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