U.S. CPS gross flows data indicate that in recessions firms actually increase their hiring rates from the pools of the unemployed and out of the labor force. Why so? The paper provides an explanation by studying the optimal recruiting behavior of the representative firm. This behavior is a...

We provide empirical evidence of the relationship between downward wage rigidity and unemployment volatility by comparing wage dynamics and worker mobility during the Great Recession in two countries where wages adjusted very differently: Latvia and Spain. Using a panel of social security...