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Labor Matching Model: Putting the Pieces Together

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  • Anton Cheremukhin

    (UCLA)

Abstract

The original Mortensen-Pissarides model possesses two elements that are absent from the commonly used simplified version: the job destruction margin and training costs. I find that these two elements enable a model driven only by productivity shocks to simultaneously explain most of the movements in unemployment, vacancies, job destruction, job creation, the job finding rate and wages. The role of the job destruction margin in propagating productivity shocks is to create an additional pool of unemployed at the very beginning of a recession. The role of training costs is to explain the simultaneous decline in vacancies.

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  • Anton Cheremukhin, 2010. "Labor Matching Model: Putting the Pieces Together," 2010 Meeting Papers 260, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:260
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    File URL: https://economicdynamics.org/meetpapers/2010/paper_260.pdf
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    References listed on IDEAS

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    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    2. Cheremukhin, Anton A. & Restrepo-Echavarria, Paulina, 2014. "The labor wedge as a matching friction," European Economic Review, Elsevier, vol. 68(C), pages 71-92.
    3. repec:wop:calsdi:97-23 is not listed on IDEAS
    4. Cole, Harold L & Rogerson, Richard, 1999. "Can the Mortensen-Pissarides Matching Model Match the Business-Cycle Facts?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 933-959, November.
    5. Julio J. Rotemberg, 2008. "Cyclical Wages in a Search-and-Bargaining Model with Large Firms," NBER Chapters,in: NBER International Seminar on Macroeconomics 2006, pages 65-114 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Venky Venkateswaran, 2011. "Heterogeneous Information and Labor Market Fluctuations," 2011 Meeting Papers 1292, Society for Economic Dynamics.

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