Evidence and Theory on Asymmetries in US Aggregate Job Flows

Fabrice Collard (), Patrick Fève (), Francois Langot () and Corrine Perraudin ()
Additional contact information
Patrick Fève: Nantes University and CEPREMAP
Corrine Perraudin: CEPREMAP

No 1221, Computing in Economics and Finance 1999 from Society for Computational Economics

Abstract: Recent studies of aggregate job flows in the US economy indicate that (i) specific sectoral shocks are important to account for aggregate job flows dynamics and (ii) aggregate creation and destruction dynamics display significant non-linearities. This paper aims to study whether a simple matching model in the labor market extended to firm heterogeneity and endogenous firings can account for these findings. Each firm chooses endogenously its level of hiring or firing depending on the level of sectoral shocks. Such a non-differentiability in policy rules allows, via aggregation, accounting for non-linear dynamics in aggregate job flows. The deep parameters of the model are then estimated using a simulated based estimation and testing method. We then show that the model is able to match the observed non-linear dynamics in aggregate job flows for a high enough level of heterogeneity.

Date: 1999-03-01

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