Financial Constraints, Wage Rigidity, and the Labor Market

Tobias Föll

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies the effects of combining financial frictions with wage rigidity in a search and matching framework. The model is able to match three empirical observations that existing search and matching models struggle to explain jointly: the cyclical component of the unemployment rate is positively skewed, the number of hires tends to increase in recessions, and the correlation between vacancies and unemployment is highly negative.

JEL-codes: E24 E27 E32 E44 J63 J64 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168080

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