I specify a simple search and matching model of the labor market and estimate it on unemployment and vacancy data for Hong Kong over the period 2000-2010 using Bayesian methods. The model fits the data remarkably well. The estimation shows that the main driver of fluctuations in the labor market...

We evaluate the ability of the labor market search and matching framework to account for the variation in aggregate hours worked. The model we develop and estimate features search frictions in the labor market, capital and investment adjustment costs, as well as variable hours at the worker...

Long-term unemployment rose dramatically during the recent recession and remains elevated. In this essay, Richmond Fed vice president Andreas Hornstein and senior economist Thomas A. Lubik analyze the potential causes of this increase and explore various explanations of “duration...

I specify a simple search and matching model of the labor market and estimate it on unemployment and vacancy data for Hong Kong over the period 2000-2010 using Bayesian methods. The model fits the data remarkably well. The estimation shows that the main driver of fluctuations in the labor market...

Long-term unemployment rose dramatically during the recent recession and remains elevated. A primary cause may be the fact that more workers with inherently low job finding rates have become unemployed. This would suggest that the natural rate of unemployment has increased, and that additional...

The "unemployment gap" is an important factor in monetary policy decisions. But the size of the gap depends on the level of natural rate of unemployment, which is inherently unobservable. The uncertainty surrounding estimates of the natural rate, and the costs of mismeasuring it, may recommend a...