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Understanding Labour Market Frictions: A Tobin’s Q Approach

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  • Parantap Basu

Abstract

Labour market friction is viewed as the Tobin’s Q of an employed worker as opposed to the position of the Beveridge curve. This Tobin’s Q is inversely proportional to the average quality of the match between employers and workers. Based on this measure, I find that the labour market friction behaves procyclically in the US, which is indicative of the fact that firms compromise on the quality of the skill match during an expansion.

Suggested Citation

  • Parantap Basu, 2006. "Understanding Labour Market Frictions: A Tobin’s Q Approach," CDMA Conference Paper Series 0601, Centre for Dynamic Macroeconomic Analysis.
    • Handle: RePEc:san:cdmacp:0601
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    File URL: https://www.st-andrews.ac.uk/CDMA/papers/cp0601.pdf
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