This paper studies the role of investment-specific shocks as an amplification mechanism of labor market fluctuations. We first show evidence suggesting that after a fall in the relative price of new equipment, not only do investment and output increase but firms also post more vacancies, hours...

We study whether segmented labor markets with flexibility at the margin (e.g., just affecting fixed-term employees) can achieve similar volatility than fully deregulated labor markets. Flexibility at the margin produces a gap in separation costs among matched workers that cause fixed-term...

We study the business cycle behavior of segmented labor markets with flexibility at the margin (e.g., just affecting fixed-term employees) and ask whether these types of labor markets can display similar volatilities as fully deregulated ones. We present a matching model with temporary and...

This paper extends the Diamond-Mortensen-Pissarides (DMP) matching model with endogenous job destruction by introducing post-match labor turnover costs (PMLTC). We consider training and separation costs which create heterogeneity among workers. In particular, there are two types of employed...

This paper extends the standard matching model by introducing a gap in separation costs between entrant and incumbent workers. We show that when this gap is omitted from the model, these costs do not improve the labor market volatility without introducing unrealistic unemployment responses to...