Gross Worker Flows over the Business Cycle

We build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states: employment, unemployment, and nonparticipation. Our parsimonious model is able to...

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Bibliographic Details
Published in:The American economic review 2017-11, Vol.107 (11), p.3447-3476
Main Authors: Krusell, Per, Mukoyama, Toshihiko, Rogerson, Richard, Şahin, Ayşegül
Format: Article
Language:English
Subjects:
Business cycles
Economic fluctuations
Economic models
Economics
Employment
Employment opportunity
Flow velocity
Job hunting
Labor market
Labor markets
Labor supply
Nationalekonomi
Stock market fluctuations
Unemployment
Workforce
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Summary:We build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states: employment, unemployment, and nonparticipation. Our parsimonious model is able to capture the hey features of the cyclical movements in gross worker flows. Despite the fact that the wage per efficiency unit is constant over time, intertemporal substitution plays an important role in shaping fluctuations in the participation rate.
ISSN:0002-8282
1944-7981
1944-7981
DOI:10.1257/aer.20121662