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Endogenous Separations, Wage Rigidities and Employment Volatility
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
Research Department, Sveriges Riksbank.
2016 (English)Report (Other academic)
Abstract [en]

We show that in micro data, as well as in a search and matching model with endogenous separations and rigid wages, separations and hence employment volatility are non-neutral to wage rigidities of incumbent workers. In contrast to when all wages are flexible, the standard deviation of unemployment in a model with rigid wages for incumbent workers (only) matches the standard deviation in the data. Thus, the degree of wage rigidity for newly hired workers is not a sufficient statistic for determining the effect of wage rigidities on macroeconomic outcomes in this class of models.

Place, publisher, year, edition, pages
Uppsala, 2016. , 25 p.
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2016:12
Keyword [en]
earch and matching, Unemployment volatility puzzle, Wage rigidities, Job De-struction
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Research subject
URN: urn:nbn:se:uu:diva-302112OAI: oai:DiVA.org:uu-302112DiVA: diva2:956502
Available from: 2016-08-30 Created: 2016-08-30 Last updated: 2016-08-31Bibliographically approved

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Carlsson, Mikael
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