Employment has fallen during this recession but by much less than the fall in output. This article examines how the behaviour of the labour market compares with previous recessions. A number of factors, including greater flexibility in real wages, may have helped to mitigate the fall in...

Macroeconomic performance in the United Kingdom has been disappointing in recent years: for most of the post-crisis period, GDP growth has been unexpectedly weak, and inflation unexpectedly strong. That unexpected weakness in GDP reflects a combination of weaker growth in the United Kingdom’s...

We embed convex hiring and investment costs and their interaction in a New Keynesian DSGE model with Nash wage bargaining. We explore the implications with respect to inflation dynamics in the New Keynesian Phillips curve. We use two structural estimation methods (GMM and Bayesian estimation)...

We embed convex hiring and investment costs and their interaction in a New Keynesian DSGE model with Nash wage bargaining. We explore the implications with respect to inflation dynamics. We estimate hiring frictions to explain about 60% of the variation in marginal costs, the labor share to...

Using publicly available data for a group of 20 OECD countries, we find that the cyclical volatility of the unemployment rate exhibits substantial cross-country and time variation. We then investigate empirically whether labour market institutions can account for this observed heterogeneity and...

We extend the standard textbook search and matching model by introducing deep habits in consumption. The cyclical fluctuations of vacancies and unemployment in our model can replicate those observed in the US data, with labour market tightness being 20 times more volatile than consumption....

Shocks to investment-specific technology have been identified as a main source of U.S. aggregate output volatility. In this paper we assess the contribution of these shocks to the volatility of labor market variables, namely, unemployment, vacancies, tightness and the job-finding rate. Thus, our...

Standard models of temporary contracts are either inconclusive, or fail to account for the positive correlation between temporary contracts and the employment rate, and for the high transition rates into permanent employment measured in Europe. This paper shows that a matching model in which...

In Italy, following WWII, specific hiring procedures were developed that prevented firms from screening workers. More in particular, these institutions characterized the Italian labor market with respect to the US labor market, and were gradually removed during the 1990s. A simple matching model...