Business cycle asymmetries and the labor market

Britta Kohlbrecher and Christian Merkl

No 03/2022, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: This paper shows that a search and matching model with idiosyncratic training cost shocks can explain the asymmetric movement of the job-finding rate over the business cycle and the decline of matching efficiency in recessions. Large negative aggregate shocks move the hiring cutoff into a part of the training cost distribution with higher density. The position of the hiring cutoff in the distribution is disciplined by the empirical elasticity of the job-finding rate with respect to market tightness. Our model explains a large fraction of the matching efficiency decline during the Great Recession and generates state-dependent effects of policy interventions.

Keywords: Business cycle asymmetries; matching function; Beveridge curve; job-finding rate; unemployment; effectiveness of policy (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 J64 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Business cycle asymmetries and the labor market (2022)
Working Paper: Business Cycle Asymmetries and the Labor Market (2016)
Working Paper: Business Cycle Asymmetries and the Labor Market (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwqwdp:032022

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