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Do job destruction shocks matter in the theory of unemployment
Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated M...
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| Format: | Default Article |
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2018
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| Online Access: | https://hdl.handle.net/2134/38194 |
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| _version_ | 1818168185855148032 |
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| author | Melvyn G. Coles Ali Moghaddasi Kelishomi |
| author_facet | Melvyn G. Coles Ali Moghaddasi Kelishomi |
| author_sort | Melvyn G. Coles (7199078) |
| collection | Figshare |
| description | Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated Method of Moments (SMM) finds the vacancy creation process is less than infinitely elastic. Because a recession-leading job separation shock then causes vacancies to fall as unemployment increases, the ad hoc restriction to zero job separation shocks (to generate Beveridge curve dynamics) becomes redundant. In contrast to standard arguments, the calibrated model finds the job separation process drives unemployment volatility over the cycle. |
| format | Default Article |
| id | rr-article-9501971 |
| institution | Loughborough University |
| publishDate | 2018 |
| record_format | Figshare |
| spelling | rr-article-95019712018-07-01T00:00:00Z Do job destruction shocks matter in the theory of unemployment Melvyn G. Coles (7199078) Ali Moghaddasi Kelishomi (7199081) Other commerce, management, tourism and services not elsewhere classified Other economics not elsewhere classified untagged Economics Business and Management not elsewhere classified Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated Method of Moments (SMM) finds the vacancy creation process is less than infinitely elastic. Because a recession-leading job separation shock then causes vacancies to fall as unemployment increases, the ad hoc restriction to zero job separation shocks (to generate Beveridge curve dynamics) becomes redundant. In contrast to standard arguments, the calibrated model finds the job separation process drives unemployment volatility over the cycle. 2018-07-01T00:00:00Z Text Journal contribution 2134/38194 https://figshare.com/articles/journal_contribution/Do_job_destruction_shocks_matter_in_the_theory_of_unemployment/9501971 CC BY-NC-ND 4.0 |
| spellingShingle | Other commerce, management, tourism and services not elsewhere classified Other economics not elsewhere classified untagged Economics Business and Management not elsewhere classified Melvyn G. Coles Ali Moghaddasi Kelishomi Do job destruction shocks matter in the theory of unemployment |
| title | Do job destruction shocks matter in the theory of unemployment |
| title_full | Do job destruction shocks matter in the theory of unemployment |
| title_fullStr | Do job destruction shocks matter in the theory of unemployment |
| title_full_unstemmed | Do job destruction shocks matter in the theory of unemployment |
| title_short | Do job destruction shocks matter in the theory of unemployment |
| title_sort | do job destruction shocks matter in the theory of unemployment |
| topic | Other commerce, management, tourism and services not elsewhere classified Other economics not elsewhere classified untagged Economics Business and Management not elsewhere classified |
| url | https://hdl.handle.net/2134/38194 |