Endogenous Separations, Wage Rigidities and Employment Volatility
2016 (English)Report (Other academic)
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
earch and matching, Unemployment volatility puzzle, Wage rigidities, Job De-struction
Research subject Economics
IdentifiersURN: urn:nbn:se:uu:diva-302112OAI: oai:DiVA.org:uu-302112DiVA: diva2:956502