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On-the-job search and the cyclical dynamics of the labor market

Michael Krause () and Thomas Lubik ()

No 10-12, Working Paper from Federal Reserve Bank of Richmond

Abstract: We develop a business cycle model with search and matching frictions in the labor market and show that on-the-job search generates substantial amplification and propagation. Rising search by employed workers in an expansion amplifies the incentives of firms to post vacancies. By keeping job creation costs low for firms, on-the-job search amplifies exogenous shocks. In our calibration, this allows the model to generate fluctuations of unemployment, vacancies, and job-to-job transitions whose magnitudes are close to the data, and leads output to be highly autocorrelated. On-the-job search implies higher-order serial correlation that is absent from the standard search and matching model.

Keywords: Labor; market (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
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Related works:
Working Paper: On-the-job search and the cyclical dynamics of the labor market (2007) Downloads
Working Paper: On-the-Job Search and the Cyclical Dynamics of the Labor Market (2006)
Working Paper: On-the-job Search and the Cyclical Dynamics of the Labor Market (2005) Downloads
Working Paper: On-the-Job Search and the Cyclical Dynamics of the Labor Market (2004) Downloads
Working Paper: On-the-job Search and the Cyclical Dynamics of the Labor Market (2004) Downloads
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