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A Theory of Labor Markets with Inefficient Turnover

Blanco, Andrés; Drenik, Andres; Moser, Christian; … - National Bureau of Economic Research - 2024

We develop a theory of labor markets with four features: search frictions, worker productivity shocks, wage rigidity, and two-sided lack of commitment. Inefficient job separations occur in the form of endogenous quits and layoffs that are unilaterally initiated whenever a worker's...

Persistent link: https://www.econbiz.de/10014544688

Implications of Labor Market Frictions for Risk Aversion and Risk Premia

Swanson, Eric T. - 2019

household's attitudes toward risk, as shown in Swanson (2012). In this paper, I analyze how frictional labor markets affect that … analysis. Household risk aversion (as measured by willingness to pay to avoid a wealth shock) is higher: 1) in countries with … in Europe are large enough to play a substantial contributing role to risk aversion in those countries. Nevertheless …

Persistent link: https://www.econbiz.de/10012479714

Unions in a Frictional Labor Market

Krusell, Per - 2012

A labor market with search and matching frictions, where wage setting is controlled by a monopoly union that follows a norm of wage solidarity, is found vulnerable to substantial distortions associated with holdup. With full commitment to future wages, the union achieves efficient hiring in the...

Persistent link: https://www.econbiz.de/10012460442

Aggregate Labor Market Outcomes : The Role of Choice and Chance

Krusell, Per - 2009

Commonly used frictional models of the labor market imply that changes in frictions have large effects on steady state employment and unemployment. We use a model that features both frictions and an operative labor supply margin to examine the robustness of this feature to the inclusion of a...

Persistent link: https://www.econbiz.de/10012463397

Aggregate Implications of Indivisible Labor, Incomplete Markets, and Labor Market Frictions

Krusell, Per - 2008

This paper analyzes a model that features frictions, an operative labor supply margin, and incomplete markets. We first provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions. We show that the steady state levels...

Persistent link: https://www.econbiz.de/10012464776

u* = √uv

Michaillat, Pascal; Saez, Emmanuel - National Bureau of Economic Research - 2022

Most governments are mandated to maintain their economies at full employment. We propose that the best marker of full employment is the efficient unemployment rate, u*. We define u* as the unemployment rate that minimizes the nonproductive use of labor--both jobseeking and recruiting. The...

Persistent link: https://www.econbiz.de/10013334429

Rent Rigidity, Asymmetric Information, and Volatility Bounds in Labor Markets

Bruegemann, Bjoern - 2007

offer two contributions. First, we derive upper bounds on labor market volatility that apply if the model of wage … tight: rent rigidity generates no more than a third of observed volatility, an outcome that is closer to Nash bargaining …

Persistent link: https://www.econbiz.de/10012465625

Bonus Question : Does Flexible Incentive Pay Dampen Unemployment Dynamics?

Gaur, Meghana; Grigsby, John R.; Hazell, Jonathon; … - National Bureau of Economic Research - 2023

We introduce dynamic incentive contracts into a model of unemployment dynamics and present three results. First, wage cyclicality from incentives does not dampen unemployment dynamics: the response of unemployment to shocks is first-order equivalent in an economy with flexible incentive pay and...

Persistent link: https://www.econbiz.de/10014372479

Money in a Heterogeneous Agent Model

Farmer, Roger E. A. - National Bureau of Economic Research - 2024

I introduce money into an incomplete markets model with heterogeneous agents and uninsurable income risk. I show that … the model exhibits both non-monetary and monetary equilibria, with the latter existing when income risk is sufficiently …

Persistent link: https://www.econbiz.de/10015056162

Modeling Migration-Induced Unemployment

Michaillat, Pascal - National Bureau of Economic Research - 2024

Immigration is often blamed for increasing unemployment among local workers. However, standard models, such as the neoclassical model and the Diamond-Mortensen-Pissarides matching model, inherently assume that immigrants are absorbed into the labor market without affecting local unemployment....

Persistent link: https://www.econbiz.de/10015094889