Unemployment Volatility and Networks

Steven Kivinen

Working Papers from Dalhousie University, Department of Economics

Abstract: I incorporate social networks into a search and matching model, allowing for congestion effects. The model predicts that the presence of network externalities increases the volatility of unemployment and other variables. I demonstrate analytically that aggregate matching functions exhibit decreasing returns to scale under certain conditions, that unemployment and matching rates have a larger response to productivity shocks, and that labour market tightness adjusts more slowly to its steady-state. Numerical simulations demonstrate that network effects can generate increases in the volatility of unemployment and matching rates, as well as increases in the autocorrelation of vacancies.

Keywords: Social Networks; Unemployment; Search and Matching (search for similar items in EconPapers)
Pages: 33 pages
Date: 2017-03-15
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-ure
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http://wp.economics.dal.ca/RePEc/dal/wpaper/DalEconWP2017-02.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:dal:wpaper:daleconwp2017-02

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