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Long Live the Vacancy

Author

Listed:
  • Haefke, Christian
  • Reiter, Michael

Abstract

We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions for constrained efficiency and discuss important implications of vacancy longevity for modeling and calibration, in particular regarding match cyclicality and wages. When calibrated to the postwar US economy, the model explains not only standard deviations and autocorrelations of labor market variables, but also their dynamic correlations with only one shock.

Suggested Citation

  • Haefke, Christian & Reiter, Michael, 2020. "Long Live the Vacancy," GLO Discussion Paper Series 654, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:654
    as

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    References listed on IDEAS

    as
    1. Andreas Kettemann & Andreas I. Mueller & Josef Zweimüller, 2018. "Vacancy durations and entry wages: evidence from linked vacancy-employer-employee data," ECON - Working Papers 312, Department of Economics - University of Zurich.
    2. Melvyn G. Coles & Ali Moghaddasi Kelishomi, 2018. "Do Job Destruction Shocks Matter in the Theory of Unemployment?," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 118-136, July.
    3. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Beveridge Curve; Business Cycles; Job Destruction; Random Matching; Separations; Unemployment Volatility; Wage Determination;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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