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Shocks and institutions in a job matching model

Christian Haefke ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper explains the divergent behavior of European an US unemployment rates using a job market matching model of the labor market with an interaction between shocks an institutions. It shows that a reduction in TF growth rates, an increase in real interest rates, and an increase in tax rates leads to a permanent increase in unemployment rates when the replacement rates or initial tax rates are high, while no increase in unemployment occurs when institutions are "employment friendly". The paper also shows that an increase in turbulence, modelle as an increase probability of skill loss, is not a robust explanation for the European unemployment puzzle in the context of a matching model with both endogenous job creation and job estruction.

Keywords: Job matching model; unemployment; unemployment benefits; turbulence; TFP slowdown (search for similar items in EconPapers)
JEL-codes: E24 J64 (search for similar items in EconPapers)
Date: 2001-03, Revised 2001-08
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Related works:
Working Paper: Shocks and Institutions in a Job Matching Model (2001) Downloads
Working Paper: Shocks and Institutions in a Job Matching Model (2001) Downloads
Working Paper: Shocks and Institutions in a Job Matching Model (2001) Downloads
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