Job search intensity and wage rigidity in business cycles

Yuki Uemura

Journal of Macroeconomics, 2024, vol. 82, issue C

Abstract: Search intensity, as well as the aggregate economic condition, is a crucial factor that determines unemployed workers’ success in job searches. Their search intensity is predicted to be procyclical in standard search and matching models. However, many empirical studies show that search intensity is countercyclical. This study examines the job search behavior of unemployed workers over business cycles using a search and matching model that incorporates wage rigidity and a generalized matching function. Unlike previous studies, the proposed model can generate both procyclical and countercyclical search intensities by introducing wage rigidity. This study calibrates the model to the U.S. economy and provides various impulse response analyses. The numerical exercises show that the model successfully and simultaneously reproduces countercyclical search efforts and sizable labor market fluctuations.

Keywords: Search intensity; Business cycles; Wage rigidity; Unemployment fluctuations; Matching function (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:82:y:2024:i:c:s0164070424000399

DOI: 10.1016/j.jmacro.2024.103624

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