Reconciling endogenous job destruction with labor market stylized facts: The role of hiring costs
Language
EN
Article de revue
This item was published in
Economics Letters. 2018, vol. 171, p. 198-201
English Abstract
This note considers a Real Business Cycle model with search and matching frictions as well as purely endogenous separations in line with the model of Mortensen and Pissarides (1994) in order to solve the Shimer (2005) ...Read more >
This note considers a Real Business Cycle model with search and matching frictions as well as purely endogenous separations in line with the model of Mortensen and Pissarides (1994) in order to solve the Shimer (2005) puzzle. This puzzle shows the inconsistency of such a model to capture the high volatility of labor market variables (unemployment, vacancies) and cyclical property (Beveridge curve, job creation and destruction). Using hiring costs rather than vacancy posting cost in this setup allows to solve this puzzle.Read less <
English Keywords
Business cycles
Firing cost
Hiring cost
Labor markets