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The Unemployment Volatility Puzzle: The Role of Matching Costs Revisted

Silva Becerra, Jose I., Toledo, Manuel (2013) The Unemployment Volatility Puzzle: The Role of Matching Costs Revisted. Economic Inquiry, 51 (1). pp. 836-843. ISSN 1465-7295. (doi:10.1111/j.1465-7295.2011.00407.x) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1111/j.1465-7295.2011.00407.x

Abstract

Pissarides has argued that the standard search model with sunk fixed matching costs increases unemployment volatility without introducing an unrealistic response of wages of new matches to productivity shocks. We revise the role of matching costs and show that when these costs are not sunk and, therefore, can be partially passed on to new hired workers in the form of lower wages, the amplification mechanism of fixed matching costs is considerably reduced. Finally, we observe that an empirical reasonable share of sunk costs is not able to match the volatility of unemployment without introducing unrealistic sensitivity to unemployment benefits. (JEL E32, J32, J64)

Item Type: Article
DOI/Identification number: 10.1111/j.1465-7295.2011.00407.x
Additional information: number of additional authors: 1;
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Stewart Brownrigg
Date Deposited: 07 Mar 2014 00:05 UTC
Last Modified: 29 May 2019 12:21 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/40243 (The current URI for this page, for reference purposes)
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