Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223416 
Year of Publication: 
2020
Series/Report no.: 
IHS Working Paper No. 22
Publisher: 
Institut für Höhere Studien - Institute for Advanced Studies (IHS), Vienna
Abstract: 
We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions for constrained efficiency and discuss important implications of vacancy longevity for modeling and calibration, in particular regarding match cyclicality and wages. When calibrated to the postwar US economy, the model explains not only standard deviations and autocorrelations of labor market variables, but also their dynamic correlations with only one shock.
Subjects: 
Beveridge Curve
Business Cycles
Job Destruction
Random Matching
Separations
Unemployment Volatility
Wage Determination
JEL: 
E24
E32
J63
J64
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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