 The Labour Market over the Business Cycle: Can Theory Fit the Facts?Stephen Millard, Andrew Scott and Marianne Sensier () Oxford Review of Economic Policy, 1997, vol. 13, issue 3, 70-92 Abstract: We examine the ability of six labor market models to account for the business cycle behavior of UK labor markets when embedded in a stochastic growth model. We assess the models in terms of their ability to mimic general business cycle correlations and volatility, their success at explaining the persistence of labor market fluctuations, and whether they can explain why the growth and speed of adjustment of labor market variables changes between periods of expansions and contractions. The main success of the models is their ability broadly to account for business cycle correlations and comovements and the variations in employment/unemployment growth rates between expansions and contractions. However, there are three main failures: the models tend to produce insufficiently volatile employment and unemployment fluctuations; they tend to produce too strong a correlation between wages and employment; and most of them generate only brief temporary deviations in unemployment in response to shocks rather than the protracted dynamics of the data. Copyright 1997 by Oxford University Press. Date: 1997 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:13:y:1997:i:3:p:70-92 Access Statistics for this article Oxford Review of Economic Policy is currently edited by Christopher Adam More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited |
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