Business cycle asymmetries and the labor market

Britta Kohlbrecher and Christian Merkl

Journal of Macroeconomics, 2022, vol. 73, issue C

Abstract: This paper shows that a search and matching model with idiosyncratic training cost shocks can explain the asymmetric movement of the job-finding rate over the business cycle and the decline of matching efficiency in recessions. Large negative aggregate shocks move the hiring cutoff into a part of the training cost distribution with higher density. The position of the hiring cutoff in the distribution is disciplined by the empirical elasticity of the job-finding rate with respect to market tightness. Our model explains a large fraction of the matching efficiency decline during the Great Recession and generates state-dependent effects of policy interventions.

Keywords: Labor market asymmetries; Matching function; Beveridge curve; Job-finding rate; Unemployment; Policy effectiveness (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 J64 (search for similar items in EconPapers)
Date: 2022
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Related works:
Working Paper: Business Cycle Asymmetries and the Labor Market (2016)
Working Paper: Business Cycle Asymmetries and the Labor Market (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:73:y:2022:i:c:s0164070422000520

DOI: 10.1016/j.jmacro.2022.103458

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