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Wage Posting and Business Cycles: a Quantitative Exploration

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  • 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.

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  • 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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    Cited by:

    1. Isabel Cairo & Shigeru Fujita & Camilo Morales-Jimenez, . "The Cyclicality of Labor Force Participation Flows: The Role of Labor," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    2. Andreas I. Mueller, 2017. "Separations, Sorting, and Cyclical Unemployment," American Economic Review, American Economic Association, vol. 107(7), pages 2081-2107, July.
    3. Michał Brzoza-Brzezina & Jacek Suda, 2021. "Are DSGE models irreparably flawed?," Bank i Kredyt, Narodowy Bank Polski, vol. 52(3), pages 227-252.
    4. Jacek Suda, 2016. "On the job search and working capital," IBS Working Papers 06/2016, Instytut Badan Strukturalnych.
    5. Clémence Berson & Marta de Philippis & Eliana Viviano, 2020. "Job-to-Job Flows and Wage Dynamics in France and Italy," Working papers 756, Banque de France.
    6. Chiara Mussida & Luca Zanin, 2020. "I found a better job opportunity! Voluntary job mobility of employees and temporary contracts before and after the great recession in France, Italy and Spain," Empirical Economics, Springer, vol. 59(1), pages 47-98, July.
    7. Giuseppe Moscarini & Fabien Postel-Vinay, 2016. "Wage Posting and Business Cycles," American Economic Review, American Economic Association, vol. 106(5), pages 208-213, May.
    8. Jacek Suda & Marek Antosiewicz, 2016. "Business cycles and on the job search," IBS Working Papers 07/2016, Instytut Badan Strukturalnych.
    9. GORYUNOV, Maxim, 2017. "Sorting when firms have size," Economics Working Papers MWP 2017/09, European University Institute.
    10. Cynthia L. Doniger, 2021. "What Can We Learn from Idiosyncratic Wage Changes?," Finance and Economics Discussion Series 2021-055, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    Equilibrium Job Search; Dynamic Contracts; Stochastic Dynamics; Business Cycles;
    All these keywords.

    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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