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Structural unemployment

  • Benedikt Herz
  • Thijs van Rens

Structural unemployment is due to mismatch between available jobs and workers. We formalize this concept in a simple model of a segmented labor market with search frictions within segments. Worker mobility, job mobility and wage bargaining costs across segments generate structural unemployment. We estimate the contribution of these costs to fluctuations in US unemployment, operationalizing segments as states or industries. Most structural unemployment is due to wage bargaining costs, which are large but nevertheless contribute little to unemployment fluctuations. Structural unemployment is as cyclical as overall unemployment and no more persistent, both in the current and in previous recessions.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/1276.pdf
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1276.

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Date of creation: Jul 2011
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Handle: RePEc:upf:upfgen:1276
Contact details of provider: Web page: http://www.econ.upf.edu/

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