Shocks and Institutions in a Job Market Model

Wouter Den Haan, Christian Haefke, Garey Ramey
Authors registered in the RePEc Author Service: Christian Haefke (), Garey Ramey and Wouter Denhaan ()

No 215, Computing in Economics and Finance 2001 from Society for Computational Economics

Abstract: In this paper we study the effects of shocks (a slowdown in TFP growth and an increase in the real interest rate) in a model with endogenous job destruction and job creation. We show that both increase the job destruction margin and the job rejection margin and, thus, the unemployment rate. Moreover, the effects are bigger for those countries with generous unemployment benefits. This framework, thus, provides an explanation for the observation that European unemployment rates increased during the last 2/3 decades and the US unemployment rate did not. We also analyze the role of turbulence.

Keywords: unemployment; job destruction; Europe (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Date: 2001-04-01
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecf1:215

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