Turbulence And Unemployment In A Job Matching Model

Wouter J. den Haan, Christian Haefke (christian.haefke@nyu.edu) and Garey Ramey
Additional contact information
Wouter J. den Haan: London Business School,
Authors registered in the RePEc Author Service: Wouter Denhaan (wjdenhaan@gmail.com)

Journal of the European Economic Association, 2005, vol. 3, issue 6, 1360-1385

Abstract: According to Ljungqvist and Sargent (1998), high European unemployment since the 1980s can be explained by a rise in economic turbulence, leading to greater numbers of unemployed workers with obsolete skills. These workers refuse newjobs due to high unemployment benefits. In this paper we reassess the turbulence-unemployment relationship using a matching model with endogenous job destruction. In our model, higher turbulence reduces the incentives of employed workers to leave their jobs. If turbulence has only a tiny effect on the skills of workers experiencing endogenous separation, then the results of Ljungqvist and Sargent (1998, 2004) are reversed, and higher turbulence leads to a reduction in unemployment. Thus, changes in turbulence cannot provide an explanation for European unemployment that reconciles the incentives of both unemployed and employed workers. (JEL: E24, J64) Copyright (c) 2005 by the European Economic Association.

Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1542-4774/issues link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Turbulence and Unemployment in a Job Matching Model (2015)
Working Paper: Turbulence and Unemployment in a Job Matching Model (2004)
Working Paper: Turbulence and Unemployment in a Job Matching Model (2004)
Working Paper: Turbulence and unemployment in a job matching model (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:3:y:2005:i:6:p:1360-1385

Access Statistics for this article

Journal of the European Economic Association is currently edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti

More articles in Journal of the European Economic Association from MIT Press
Bibliographic data for series maintained by The MIT Press (mitp-repec@mit.edu).