Evaluating the Role of Labor Market Mismatch in Rising Unemployment
15 Pages Posted: 15 Nov 2011
Date Written: July 28, 2011
Abstract
This article shows how much a shock to the ability of firms to hire qualified workers accounts for the rise in unemployment. Using a matching function approach, the author finds that such a shock implies an unemployment rate of no more than 7.1 percent, much below the actual unemployment rate during the past two years. Hence, the recent patterns in unemployment and vacancy data do not necessarily rule out a role for monetary policy, which works by encouraging firms to hire more.
Keywords: Beveridge curve, mismatch, matching function, Mobility, Unemployment, and Vacancies, Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
JEL Classification: E60, J60
Suggested Citation: Suggested Citation
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