Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence

Luca Sala (), Söderström, Ulf and Antonella Trigari ()
Authors registered in the RePEc Author Service: Ulf Söderström ()

No 9167, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use an estimated monetary business cycle model with search and matching frictions in the labor market and nominal price and wage rigidities to study four countries (the U.S., the U.K., Sweden, and Germany) during the financial crisis and the Great Recession. We estimate the model over the period prior to the financial crisis and use the model to interpret movements in GDP, unemployment, vacancies, and wages in the period from 2007 until 2011. We show that contractionary financial factors and reduced efficiency in labor market matching were largely responsible for the experience in the U.S. Financial factors were also important in the U.K., but less so in Sweden and Germany. Reduced matching efficiency was considerably less important in the U.K. and Sweden than in the U.S., but matching efficiency improved in Germany, helping to keep unemployment low. A counterfactual experiment suggests that unemployment in Germany would have been substantially higher if the German labor market had been more similar to that in the U.S.

Keywords: Business cycles; Financial crisis; Labor market matching (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-dge, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://cepr.org/publications/DP9167 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence (2013)
Chapter: Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence (2012)
Working Paper: Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence (2012)
Working Paper: Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence (2012)
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:cpr:ceprdp:9167

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9167

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().