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Recent research in macroeconomics emphasizes the role of wage rigidity in accounting for the volatility of unemployment fluctuations. We use worker-level data from the CPS to measure the sensitivity of wages of newly hired workers to changes in aggregate labor market conditions. The wage of new...
Persistent link: https://www.econbiz.de/10011084442
We incorporate reference-dependent preferences into a search-and-matching model of the labor market, in which firms have all the bargaining power and productivity follows an AR(1) process. Motivated by Akerlof (1982) and Bewley (1999), we assume that existing workers are willing to exert unobserved,
Persistent link: https://www.econbiz.de/10011083374
This paper develops a theory characterizing the effects of fiscal policy on unemployment over the business cycle. The … theory is based on a model of equilibrium unemployment in which jobs are rationed in recessions. Fiscal policy in the form of …
Persistent link: https://www.econbiz.de/10009324257
This paper explores the interrelation between the degree of unemployment persistence and the unemployment-productivity trade-off. The analysis suggests that the more effective are structural labour market policies (designed to change labour market institutions and laws, such as job security...
Persistent link: https://www.econbiz.de/10005662035
This paper presents a theory of the monetary transmission mechanism in a monetary version of Farmer’s (2009) model in …
Persistent link: https://www.econbiz.de/10008692320
A model of the labour market under firing restrictions and endogenous quits is constructed. It is shown that in the spirit of Blanchard and Summers (1988), the model can generate multiple equilibria, with a low-quits/high-unemployment equilibrium coexisting with a high-quits/low-unemployment...
Persistent link: https://www.econbiz.de/10005791589
This paper provides an overview of the main features of unemployment in Australia, and its consequences. Its main objectives are to: describe the main features of the evolution and distribution of unemployment; present information on labour market outcomes underlying the changes in unemployment...
Persistent link: https://www.econbiz.de/10005032824
Firing costs due to employment protection legislation have two separate dimensions: a transfer from the firm to the worker to be laid off and a tax paid outside the firm-worker pair. We document that quantitatively transfers are a much larger component than taxes. Nevertheless, to avoid the...
Persistent link: https://www.econbiz.de/10005656295
Employment Protection rules have two separate dimensions: a transfer from the firm to the worker to be laid off and a tax paid outside the firm-worker pair. It is well established that with full wage flexibility statutory severance payments (pure transfers) between employers and dismissed...
Persistent link: https://www.econbiz.de/10005136767
We present a static model of aggregate demand and unemployment. The economy has a nonproduced good, a produced good, and labor. Product and labor markets have matching frictions. A general equilibrium is a set of prices, market tightnesses, and quantities such that buyers and sellers optimize...
Persistent link: https://www.econbiz.de/10011083246