Correctly measuring individual dynamics in labour market behaviour has become increasingly important as research and policy attention has become more focused on the relationships between current employment opportunities and past experience. Surveys collecting information on labour market...

Standard search models are inconsistent with the amount of frictional wage dis- persion found in U.S. data. We resolve this apparent puzzle by modeling skill development (learning by doing on the job, skill loss during unemployment) and duration dependence in unemployment benefits in a random on...

We explore the role of real wage dynamics in a New Keynesian business cycle model with search and matching frictions in the labor market. Both job creation and destruction are endogenous. We show that the model generates counterfactual inflation and labor market dynamics. In particular, it fails...

The reservation wage is an integral part of most theories of involuntary unemployment. We use panel data to examine the empirical determinants of the reservation wage - in particular the inßuence of previous wages - and consider what this implies for the evolution of the natural rate of...

In this paper we challenge the traditional labour market view, which argues that unemployment is determined in the long-term by its equilibrium rate, which in turn is affected by permanent shocks of some exogenous variables. In our empirical approach we decompose the dynamics of employment and...

Conventional wisdom suggests that nominal, demand-side shocks have only temporary effects on real macroeconomic magnitudes and that the duration of their effects depends on the degree of nominal inertia. It is also argued that, in the absence of unit roots, temporary supply-side shocks also have...

The aim of this paper is to analyze and estimate salient characteristics of unemployment dynamics. Movements in unemployment are viewed as "chain reactions" of responses to labour market shocks, working their way through systems of interacting lagged adjustment processes. In the context of...

The classical Salant-condition for the comparison of the mean interrupted spell length of the stock of unemployed and the mean completed spell length of the corresponding flow can be substantially weakened: for a NWUE [New Worse than Used in Expectation] distribution the former is greater than...

In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The...

The paper investigates whether (unsubsidised) fixed-term contracts (FTCs) are a means of integration for the unemployed in the West German labour market. This is done by analysing whether entering into an FTC improves the employment opportunities of an unemployed person in terms of the...