More on Unemployment and Vacancy Fluctuations

Dale Mortensen and Éva Nagypál ()

No 11692, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Shimer (2005a) argues that the Mortensen-Pissarides equilibrium search model of unemployment explains only about 10% of the response in the job-finding rate to an aggregate productivity shock. Some of the recent papers inspired by his critique are reviewed and commented on here. Specifically, we suggest that the sole problem is neither the procyclicality of the wage nor the failure to account fully for the opportunity cost of employment. Although an amended version of the model, one that accounts for capital costs and counter cyclic involuntary separations, does much better, it still explains only 40% of the observed volatility of the job-finding rate. Finally, allowing for on-the-job search does not improve the amended models implications for the amplification of productivity shocks.

JEL-codes: E2 G0 J0 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-dge, nep-lab, nep-ltv and nep-mac
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published as Dale Mortensen & Eva Nagypal, 2007. "More on Unemployment and Vacancy Fluctuations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 327-347, July.

Downloads: (external link)
http://www.nber.org/papers/w11692.pdf (application/pdf)

Related works:
Journal Article: More on Unemployment and Vacancy Fluctuations (2007)
Working Paper: More on Unemployment and Vacancy Fluctuations (2005)
Working Paper: More on Unemployment and Vacancy Fluctuations (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11692

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11692

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().