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The cyclicality of labor-market flows: A multiple-shock approach

Author

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  • Jean-Olivier Hairault

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Anastasia Zhutova

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

In this paper, we aim to establish some stylized facts about the relative contributions of the job-finding and separation rates to unemployment dynamics depending on the nature of structural shocks. The shocks in our Bayesian Structural VAR model are identified using a sign-restriction approach, and capture shifts in the three conditions determining labor-market equilibrium in matching models: the Beveridge curve, and the job-creation and job-destruction conditions. Using both US and French data, we identify an aggregate shock to match profitability (the aggregate-profitability shock), a shock specific to existing jobs (the reallocation shock) and a shock to the efficiency of the matching process (the matching-efficiency shock). We find that the relative contributions of the job finding and separation rates are notably different across shocks in both countries, but are similar across countries for each type of shock. Labor market dynamics appear to be Transatlantic despite well-known institutional differences. However, it must be emphasized that the reaction of the labor market variables to the matching-efficiency shock seems more muted in the US than in France.

Suggested Citation

  • Jean-Olivier Hairault & Anastasia Zhutova, 2018. "The cyclicality of labor-market flows: A multiple-shock approach," PSE-Ecole d'économie de Paris (Postprint) halshs-01802891, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01802891
    DOI: 10.1016/j.euroecorev.2018.01.008
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    More about this item

    Keywords

    Unemployment variability; Job separation; Job finding; Bayesian VAR;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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