The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited

By Marcus Hagedorn, I. Manovskii. Social Science Research Network, 2008

1,316 citations recorded by the source corpus.

Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We use data on the cost of vacancy creation and cyclicality of wages to identify the two key parameters of the model - the value of non-market activity and the bargaining weights. Our calibration implies that the model is, in fact, consistent with the data.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/310beac23e27b4d0689bd11338e459d03a1dc3c0

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In Economics and Econometrics

Citations in the corpus

Precautionary Saving Over the Business Cycle (2016, neutral): “Equations (EE-I)—(BC-I) are the Euler condition and aggregate budget constraint for impatient households (where (BC-I) is just a rewriting of (18)).”
Inflation and Unemployment in the Long Run (2011, neutral): “We also tried some alternative calibration strategies: Berentsen et al. (2008) report results when is set as in Hagedorn and Manovskii (2008), and when it is set to minimize deviations between predicted and actual u.”
The Cyclicality of the Opportunity Cost of Employment (2016, methodology): “2A number of papers have followed this reasoning to set a relatively high level of z. Hagedorn and Manovskii (2008) use a value of z = 0.955.”
Frictional Wage Dispersion in Search Models: A Quantitative Assessment (2011, neutral): “As a result, Mm > 1/ρ.(30) Stevens (1999) and Burdett and Coles (2001) generalize the wage-posting model of Burdett and Mortensen (1998) by allowing employers to offer long-term wage-tenure contracts on a take-it-or-leave-it basis.”
Finance and Misallocation: Evidence from Plant-Level Data (2014, neutral): “The process for worker efficiency pins down the precautionary savings motive and thus the equilibrium interest rate (we assume that our Benchmark economy is a closed economy and thus the equilibrium interest rate satisfies (19)), which, as we discuss below, lies in the neighborhood of 4-5% for the e”
Imperfect Competition in the Labor Market (2011, background): “…the Hosios condition for efficiency (often around 0.4), though no convincing reason for that is given, sometimes calibrated or estimated to help to explain some aspects of labor market data (and Hagedorn and Manovskii, 2008 suggest a value of 0.05 based on some of the studies reported in Table 4).”