Volatile Hiring: Uncertainty in Search and Matching Models

Wouter Den Haan (), Lukas Freund and Pontus Rendahl ()
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Wouter Den Haan: London School of Economics (LSE)
Authors registered in the RePEc Author Service: Wouter Denhaan ()

No 2011, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: This paper analyzes in detail the role of uncertainty shocks in search and matching models of the labor market, both when uncertainty actually increases and when it is only expected to do so. The non-linear nature of search frictions increases average unemployment rates during periods with higher volatility. However, they are by themselves not sufficient to raise the unemployment rate in response to an increase in perceived uncertainty. We show that key to understanding the result of Leduc and Liu (2016) that perceived uncertainty does affect the unemployment rate is the particular form of wage bargaining chosen, Nash bargaining; option value considerations play no role.

Keywords: Uncertainty; search frictions; unemployment; option value (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2020-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Volatile hiring: uncertainty in search and matching models (2021)
Working Paper: Volatile hiring: uncertainty in search and matching models (2021)
Working Paper: Volatile Hiring: Uncertainty in Search and Matching Models (2020)
Working Paper: Volatile Hiring: Uncertainty in Search and Matching Models (2020)
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