New evidence, old puzzles: technology shocks and labor market dynamics

Almut Balleer

No 1500, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Can the standard search-and-matching labor market model replicate the business cycle fluctuations of the job finding rate and the unemployment rate? In the model, fluctuations are prominently driven by productivity shocks which are commonly interpreted as technology shocks. I estimate different types of technology shocks from structural VARs and reassess the empirical performance of the standard model based on second moments that are conditional on technology shocks. Most prominently, the model replicates the conditional volatility of job finding and unemployment, so that the Shimer critique does not apply. Instead the model lacks non-technological disturbances to replicate the overall sample volatility. In addition, positive technology shocks lead to a fall in job finding and an increase in unemployment thereby opposing the dynamics in the standard model similar to the hours puzzle in Galí (1999).

Keywords: Labor market dynamics; technology shocks; structural VAR; search and matching; business cycle (search for similar items in EconPapers)
JEL-codes: E24 E32 O33 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: New evidence, old puzzles: Technology shocks and labor market dynamics (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1500

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