EconPapers    
Economics at your fingertips  
 

Search Frictions and Evolving Labour Market Dynamics

Michael Ellington, Chris Martin and Bingsong Wang ()
Additional contact information
Michael Ellington: University of Liverpool
Chris Martin: University of Bath

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper puts search frictions models under novel empirical scrutiny and tests their ability to match empirical observations. To capture changing dynamics we fit an extended Bayesian time-varying parameter VAR to US labour market data from 1962–2016. We find strong evidence against key predictions of the search frictions model, namely a large surge in vacancy creation in response to productivity shocks and a negative relationship between the volatilities of unemployment and wages. Our results question the amplification mechanism embedded in search frictions models and cast doubt on wage rigidity as a source of unemployment volatility.

Keywords: time-varying parameter model; real wages; search frictions (search for similar items in EconPapers)
JEL-codes: E23 E32 J23 J30 J64 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-com, nep-cta, nep-eur, nep-law and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/w ... /twerp_1195_wang.pdf

Related works:
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:wrk:warwec:1195

Access Statistics for this paper

More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().

 
Page updated 2020-05-17
Handle: RePEc:wrk:warwec:1195