The cyclical behavior of equilibrium unemployment and vacancies across OECD countries

Pedro Amaral and Murat Tasci

European Economic Review, 2016, vol. 84, issue C, 184-201

Abstract: We show that the inability of a standardly calibrated labor search-and-matching model to account for observed levels of labor market volatility extends beyond the U.S. to a set of OECD countries. That is, the volatility puzzle is ubiquitous. We argue that cross-country data is helpful in scrutinizing between potential solutions to this puzzle. To illustrate this, we show that the solution proposed in Hagedorn and Manovskii (2008) is rather fragile and fails for some countries in our sample. It delivers counterfactually low volatility for economies where the elasticity of wages with respect to productivity is sufficiently high and where productivity persistence and/or vacancy-filling rates are sufficiently low.

Keywords: Labor market; Vacancies; Unemployment; OECD countries (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 J64 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: The Cyclical Behavior of Equilibrium Unemployment and Vacancies Across OECD Countries (2014)
Working Paper: The Cyclical Behavior of Equilibrium Unemployment and Vacancies Across OECD Countries (2013)
Working Paper: The cyclical behavior of equilibrium unemployment and vacancies across OECD countries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:84:y:2016:i:c:p:184-201

DOI: 10.1016/j.euroecorev.2015.09.002

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