In the standard macroeconomic search and matching model of the labor market, there is a tight link between the quantitative effects of (i) aggregate productivity shocks on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We...

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...

The Austrian Beveridge curve shifted in 2014, leading to ongoing academic discussions about the reasons behind this shift. While some have argued that the shift was caused by a supply shock due to labour market liberalization, others have stated that matching efficiency decreased. Using a new...

This paper identifies and analyses a new effect related to the cyclical behavior of labor supply: the Entitled-Worker Effect (EWE). This effect is different from the well-known Added-Worker Effect (AWE) and Discouraged-Worker Effect (DWE). The EWE is a consequence of one of the most important...

Using newly digitized unemployment insurance claims data we construct a historical monthly unemployment series for U.S. states going back to January 1947. The constructed series are highly correlated with the Bureau of Labor Statics' state-level unemployment data, which are only available from...

Although the quantitative relationship between employment cyclicality and wage cyclicality is central for the dynamics of macroeconomic models, there is little empirical evidence on this topic. We use the German AWFP dataset to document that wage cyclicalities are very heterogeneous across...

Fixed-term contracts (FTCs) may be an important tool to promote employment, particularly in recessions or when permanent contracts are costly. Therefore, it may be useful to vary some of the legal parameters of FTCs over the business cycle, namely increasing their flexibility during downturns....

China's new Labor Contract Law, which intended to strengthen the labor protection for workers, went into effect on January 1, 2008. The law stipulated that the maximum cumulative duration of successive fixed-term (temporary) labor contracts is 10 years, and employees working for the same...

Will low-skilled workers be replaced by automation? To answer this question, we set up a search and matching model that features two skill types of workers and includes automation capital as an additional production factor. Automation capital is a perfect substitute for low-skilled workers and...

In this paper, we explore the dynamics of working hours and wages in a model economy where a firm and its workforce are linked to each other by an implicit contract. Specifically, we develop a deterministic and a stochastic framework in which the firm sets its level of labour utilization by...