Long Live the Vacancy

Haefke, Christian and Reiter, MichaelORCID: https://orcid.org/0000-0001-9490-8746 (September 2020) Long Live the Vacancy. IHS Working Paper Series 22, 44 p.

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Abstract or Table of Contents

We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions for constrained efficiency and discuss important implications of vacancy longevity for modeling and calibration, in particular regarding match cyclicality and wages. When calibrated to the postwar US economy, the model explains not only standard deviations and autocorrelations of labor market variables, but also their dynamic correlations with only one shock.

Item Type: IHS Series
Keywords: Beveridge Curve, Business Cycles, Job Destruction, Random Matching, Separations, Unemployment Volatility, Wage Determination
Classification Codes (e.g. JEL): E24, E32, J63, J64
Research Units: Macroeconomics and Economic Policy
Status: Published
Date Deposited: 03 Sep 2020 07:41
Last Modified: 03 Sep 2020 07:45
URI: https://irihs.ihs.ac.at/id/eprint/5419

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