The slow job recovery in a macro model of search and recruiting intensity

Sylvain Leduc and Zheng Liu

No 2016-9, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Despite steady declines in the unemployment rate and increases in the job openings rate after the Great Recession, the hiring rate in the United States has lagged behind. Significant gaps remain between the actual job filling and finding rates and those predicted from the standard labor search model. To examine the forces behind the slow job recovery, we generalize the standard model to incorporate endogenous variations in search intensity and recruiting intensity. Our model features a vacancy creation cost, which implies that firms rely on variations in both the number of vacancies and recruiting intensity to respond to aggregate shocks, in contrast to the textbook model with costless vacancy creation and thus constant recruiting intensity. Cyclical variations in search and recruiting intensity drive a wedge into the matching function even absent exogenous changes in match efficiency. Our estimated model suggests that fluctuations in search and recruiting intensity help substantially bridge the gap between the actual and model-predicted job filling and finding rates in the aftermath of the Great Recession.

JEL-codes: E32 J63 J64 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2016-05-08
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
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Citations: View citations in EconPapers (2)

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Working Paper: The Slow Job Recovery in a Macro Model of Search and Recruiting Intensity (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2016-09

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DOI: 10.24148/wp2016-09

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