On the cyclicality of unemployment: Resurrecting the participation margin
Labour Economics, 2011, vol. 18, issue 6, 822-836
This paper considers a real business cycle model with search frictions in the labor market and labor supply which is elastic along the participation margin. Previous authors have found that such models generate counterfactually procyclical unemployment and a positively sloped Beveridge curve. This paper presents a calibrated model which succeeds at generating countercyclical unemployment and a negatively sloped Beveridge curve, despite the presence of a participation margin.
Keywords: Search; Business cycles; Labor market participation (search for similar items in EconPapers)
JEL-codes: E24 E32 J22 J64 (search for similar items in EconPapers)
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