Job matching and propagation

Shigeru Fugita and Garey Ramey
Authors registered in the RePEc Author Service: Shigeru Fujita

No 06-13, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: In the U.S. labor market, the vacancy-unemployment ratio and employment react sluggishly to productivity shocks. The authors show that the job matching model in its standard form cannot reproduce these patterns due to excessively rapid vacancy responses. Extending the model to incorporate sunk costs for vacancy creation yields highly realistic dynamics. Creation costs induce entrant firms to smooth the adjustment of new openings following a shock, leading the stock of vacancies to react sluggishly.

Keywords: Job creation; Employment; Unemployment (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (1)

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Journal Article: Job matching and propagation (2007)
Working Paper: Job Matching and Propagation (2006)
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