The Division of Temporary and Permanent Employment and Business Cycle Fluctuations

Kuan-Jen Chen, Ching-chong Lai and Ting-Wei Lai

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the fluctuations in temporary relative to aggregate employment over the business cycle, as well as the underlying driving forces. We develop a dynamic general equilibrium model to investigate the following stylized facts: (i) temporary employment is more volatile than permanent employment, (ii) the share of temporary employment (the ratio of temporary to aggregate employment) exhibits strong pro-cyclicality, (iii) permanent employment lags by two quarters on average, and (iv) the correlation between temporary employment and output is stronger than that involving the permanent counterpart. The quantitative analysis suggests that the proposed channels explain the main facts very well and the model provides a possible prediction based on the counter-factual exercises.

Keywords: Pro-cyclicality of Temporary Employment; Lagged Behavior of Permanent Employment; Labor Productivity; Business Cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 2016-04-26
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:72078

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