The Unemployment Volatility Puzzle: a Note on the Role of Reference Points

Vincent Boitier ()
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Vincent Boitier: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université

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Abstract: This theoretical note aims at studying the role of reference points in generating unemployment volatility. For this purpose, I introduce the notion of reference points in a standard Mortensen-Pissarides model. I obtain two results. First, I find that the obtained model is similar to the one found by Pissarides (2009) with matching costs. Second, I show that the introduction of reference points can increase significantly unemployment volatility through a mechanism à la Hagerdorn and Manovskii (2008).

Keywords: Reference points; Job matching; Unemployment volatility (search for similar items in EconPapers)
Date: 2015
Note: View the original document on HAL open archive server: https://hal.science/hal-00878107v2
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Published in Theoretical Economics Letters, 2015, 05 (01), pp.92-96. ⟨10.4236/tel.2015.51013⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00878107

DOI: 10.4236/tel.2015.51013

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