Measuring Labor Market Uncertainty

Alex Parker and Enzo Weber
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Alex Parker: Universität Regensburg
Enzo Weber: Institute for Employment Research (IAB), Nuremberg, Germany

No 202608, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "We develop a measure of labor market uncertainty at the aggregate level. We build a search and matching model with factor stochastic volatility, where the common component of the conditional volatilities is defined as labor market uncertainty. Using rich administrative data from Germany, we show that labor market uncertainty is countercyclical and captures salient historical narratives in the German labor market. Including the measure in a VAR, we find that labor market uncertainty shocks persistently increase unemployment and primarily operate through the hiring margin. Our findings suggest that, in contrast to macro uncertainty, labor market uncertainty is more likely to cause a decline in the search intensity in the job finding rate than in the reduction of vacancy postings." (Author's abstract, IAB-Doku) ((en))

Keywords: Bundesrepublik Deutschland; Auswirkungen; Beschäftigungseffekte; Arbeitslosigkeitsentwicklung; Integrierte Erwerbsbiografien; Konjunkturabhängigkeit; konjunkturelle Arbeitslosigkeit; Konjunkturtheorie; matching; Messung; Personaleinstellung; Arbeitsmarkt; Unsicherheit; Arbeitsmarktrisiko; Arbeitsplatzgefährdung; Arbeitsplatzsicherheit; Arbeitsplatzsuchtheorie; 1992-2022 (search for similar items in EconPapers)
JEL-codes: C51 C55 C78 D81 J64 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2026-10-16
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https://doi.org/10.48720/IAB.DP.2608

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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:202608

DOI: 10.48720/IAB.DP.2608

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