The Rise in Danish Unemployment: Reallocation or Mismatch?
Two key relations in theoretical work on labor market flows are analyzed; the hiring function and the uv-curve. The relations are identified in a cointegrated VAR-model framework. The system comprising unemployment, vacancies and hirings is driven by a stochastic trend in the vacancies, corresponding to the status of vacancies as the driving force in models of labor market flows. The drift in the relations is modeled by smooth transition functions and is identified as increased mismatch problems in the Danish labor market as opposed to increased structural change.
|Date of creation:||Jul 1999|
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