Business Cycle Asymmetries and the Labor Market
39 Pages Posted: 15 Apr 2016
There are 2 versions of this paper
Business Cycle Asymmetries and the Labor Market
Business Cycle Asymmetries and the Labor Market
Date Written: March 10, 2016
Abstract
This paper shows that the matching function and the Beveridge curve in the United States exhibit strong nonlinearities over the business cycle. These patterns can be replicated by enhancing a search and matching model with idiosyncratic productivity shocks for new contacts. Large negative aggregate shocks move the hiring cutoff point into a part of the idiosyncratic density function with higher density and thereby generate large, asymmetric job-finding rate and unemployment reactions. Our proposed mechanism is of high relevance as it leads to time varying effects of certain policy interventions.
Keywords: business cycle asymmetries, matching function, Beverdige curve, job-finding rate, unemployment, effectiveness of policy
JEL Classification: E240, E320, J630, J640
Suggested Citation: Suggested Citation