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Wage Posting and Business Cycles: a Quantitative Exploration

Author

Listed:
  • Giuseppe Moscarini

    (Yale University)

  • Fabien Postel-Vinay

    (Département d'économie)

Abstract

We provide a quantitative exploration of business cycles in a frictional labor market under contract-posting. The steady-state random search and wage-posting model of Burdett and Mortensen (1998) has become the canonical structural framework for empirical analysis of worker turnover and equilibrium wage dispersion. In this paper, we provide an efficient algorithm to simulate a dynamic stochastic equilibrium version of this model, the Stochastic Burdett-Mortensen (SBM) model, and evaluate its performance against empirical evidence on fluctuations in unemployment, vacancies and wages.

Suggested Citation

  • Giuseppe Moscarini & Fabien Postel-Vinay, 2014. "Wage Posting and Business Cycles: a Quantitative Exploration," Sciences Po publications info:hdl:2441/5taek6gt3k8, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/5taek6gt3k8m0r69e1j1ombcc5
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    References listed on IDEAS

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    1. Giuseppe Moscarini & Fabien Postel-Vinay, 2013. "Stochastic Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1545-1581.
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    Citations

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    Cited by:

    1. Andreas I. Mueller, 2017. "Separations, Sorting, and Cyclical Unemployment," American Economic Review, American Economic Association, vol. 107(7), pages 2081-2107, July.
    2. Jacek Suda & Marek Antosiewicz, 2016. "Business cycles and on the job search," IBS Working Papers 07/2016, Instytut Badan Strukturalnych.
    3. Jacek Suda, 2016. "On the job search and working capital," IBS Working Papers 06/2016, Instytut Badan Strukturalnych.
    4. Giuseppe Moscarini & Fabien Postel-Vinay, 2016. "Wage Posting and Business Cycles," American Economic Review, American Economic Association, vol. 106(5), pages 208-213, May.
    5. GORYUNOV, Maxim, 2017. "Sorting when firms have size," Economics Working Papers MWP 2017/09, European University Institute.

    More about this item

    Keywords

    Equilibrium Job Search; Dynamic Contracts; Stochastic Dynamics; Business Cycles;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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