links both the cyclical fluctuations and the mean level of unemployment to the aggregate business cycle risk. The key result … of the paper is that business cycles are costly for all consumers, regardless of their wealth, yet that unemployment … fluctuations themselves are not the source of these costs. Rather fluctuations over the cycle induce higher average unemployment …

for only a small portion of the fluctuations in unemployment and vacancies (Shimer (2005a)). In this paper, the author … vintages of entrants are able to account for fluctuations in unemployment and vacancies and that, in this environment, specific …

cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability …. Cyclical changes in the separation rate lead those of unemployment, while the job finding rate and unemployment move … contemporaneously. Fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment, depending on …

are four main findings. First and foremost, the baseline model can generate the observed large volatility of unemployment … and vacancies with a realistic replacement ratio of the unemployment insurance benefits of 64 percent. Second, labor … value of unemployment close to the value of employment, which is crucial in generating a strong amplification, even with the …

unemployment and vacancies with a realistic replacement ratio of the unemployment insurance benefits of 64 percent. Second, labor … value of unemployment close to the value of employment, which is crucial in generating a strong amplification, even with the … properties of unemployment and vacancies: Most workers are well insured only with self-insurance. Fourth, the model better …

applications, I first show that firm wages dampen wage variation over the business cycle, amplifying that in unemployment, with …