Gross Worker Flows and Fluctuations in the Aggregate Labor Market

Per Krusell, Toshihiko Mukoyama, Richard Rogerson and Aysegul Sahin

Review of Economic Dynamics, 2020, vol. 37 Supplement 1, S205-S226

Abstract: We build a three-state general equilibrium model of the aggregate labor market that features both standard labor supply forces and labor market frictions. Our model matches key features of the cyclical properties of employment, unemployment, and nonparticipation as well as those of gross worker flows across these three labor market states. Our key finding is that shocks to labor market frictions play a dominant role in accounting for labor market fluctuations. This is in contrast to the focus of the traditional RBC literature, which emphasized how employment fluctuations arise as a consequence of labor supply responses to price changes induced by TFP shocks. (Copyright: Elsevier)

Keywords: Gross worker flows; Labor supply; Labor market frictions; Business cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 J22 J64 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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DOI: 10.1016/j.red.2020.06.010

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