Shocks and Institutions in a Job Matching Model

Wouter Den Haan, Christian Haefke (christian.haefke@nyu.edu) and Garey Ramey
Authors registered in the RePEc Author Service: Wouter Denhaan (wjdenhaan@gmail.com)

No 2970, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper explains the divergent behaviour of European and US unemployment rates using a job market-matching model of the labour market with an interaction between shocks and institutions. It shows that a reduction in TFP growth rates, an increase in real interest rates, and an increase in tax rates leads to a permanent increase in unemployment rates when the replacement rates or initial tax rates are high, while no increase in unemployment occurs when institutions are ?employment friendly.? The Paper also shows that an increase in turbulence, modelled as an increase probability of skill loss, is not a robust explanation for the European unemployment puzzle in the context of a matching model with both endogenous job creation and job destruction.

Keywords: Job matching model; Unemployment; Unemployment benefits; Turbulence; Tfp slowdown (search for similar items in EconPapers)
JEL-codes: E24 J64 (search for similar items in EconPapers)
Date: 2001-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

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Related works:
Working Paper: Shocks and Institutions in a Job Matching Model (2001)
Working Paper: Shocks and Institutions in a Job Matching Model (2001)
Working Paper: Shocks and institutions in a job matching model (2001)
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