the ir relevance of real wage rigidity in the new keynesian model with search frictions we explore the role of real wage dynamics in a new keynesian business cycle model with search and matching frictions in the labor market both job creation and destruction are endogenous we show that the model generates counterfactual inflation and labor market dynamics in particular it fails to generate a beveridge curve vacancies and unemployment are positively correlated introducing real wage rigidity leads to a negative correlation and increases the magnitude of labor market flows to more realistic values however inflation dynamics are only weakly affected by real wage rigidity this is because of the presence of labor market frictions which generate long run employment relationships the measure of real marginal cost that is relevant for inflation dynamics via the phillips curve contains a dynamic component that does not necessarily move with real wages

the brevity and violence of contractions and expansions abstract early studies of business cycles argued that contractions in economic activity were briefer shorter and more violent rapid than expansions this paper systematically investigates this claim and in the process discovers a robust new business cycle fact contractions in employment are briefer and more violent than expansions but we cannot reject the null of equal brevity and violence for expansions and contractions in output the difference arises because employment typically lags output around peaks but they coincide in their troughs we discuss the performance of existing business cycle models in accounting for this fact and conclude that none can fully account for it we then show that a business cycle model with asymmetric adjustment costs on employment and a choice of when to scrap old technologies can account for the business cycle fact both qualitatively and quantitatively

the real wage cyclicality of newly hired and incumbent workers in germany several recent macroeconomic models assume that real wages are rigid the wage rigidity of newly hired workers assumes a crucial role in these models as the decision of whether to open a vacancy is primarily influenced by real hiring wages this article analyses the cyclical behaviour of real wages in germany it considers recent concerns that not controlling for cyclical job up and downgrading leads to biased results the results indicate that wages are not rigid neither for all workers nor for newly hired workers but instead respond considerably to business cycle conditions

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

frictional wage dispersion in search models a quantitative assessment we propose a new measure of frictional wage dispersion the mean min wage ratio for a large class of search models we show that this measure is independent of the wage offer distribution but depends on statistics of labor market turnover and on preferences under plausible preference parameterizations observed magnitudes for worker flows imply that in the basic search model and in most of its extensions frictional wage dispersion is very small notable exceptions are some of the most recent models of on the job search our new measure allows us to rationalize the diverse empirical findings in the large literature estimating structural search models

measuring energy poverty in japan 2004 2013 abstract this paper first examines energy or fuel poverty in japan from 2004 to 2013 especially around the time of the 2011 great east japan earthquake geje to analyze the issue the paper employs various poverty and vulnerability measures with the assistance of our unique dataset the results indicate the aggravation of energy poverty among lower income and vulnerable households during the past decade resulting from both the escalation of energy prices and lowering of income the analysis also employs a new decomposition technique and identifies the explanatory factors associated with the increase in energy poverty these results suggest there were major changes in the forces driving the increase in energy poverty before and after the geje after 2011 income alleviates energy poverty in japan with energy prices becoming the main driving factor

real wage rigidities and the cost of disinflations this paper analyzes the cost of disinflations under real wage rigidities in a micro founded new keynesian model the conventional view is that real wage rigidities can be a useful mechanism to generate a slump in output after a credible disinflationary policy because they prevent the immediate adjustment of inflation this view is flawed since it depends on analyzing the model in a linearized framework once nonlinearities are taken into account the results change both qualitatively and quantitatively disinflations actually lead to a permanently higher level of output and real wage rigidities increase the output during the adjustment to the new steady state

identifying asymmetric effects of labor market reforms abstract this paper proposes a novel approach to identify structural long term driving forces of the labor market and their short run state dependent effects based on search and matching theory our empirical model extracts these driving forces within an unobserved components approach we relate changes in the labor market structures to reforms that enhance the flexibility of the labor market in expansion and recession results for germany and spain show that labor market reforms have substantially weaker beneficial effects in the short run when implemented in recessions from a policy perspective these results highlight the costs of introducing reforms in recessions

the effects of extended unemployment insurance over the business cycle evidence from regression discontinuity estimates over 20 years one goal of extending the duration of unemployment insurance ui in recessions is to increase ui coverage in the face of longer unemployment spells although it is a common concern that such extensions may themselves raise nonemployment durations it is not known how recessions would affect the magnitude of this moral hazard to obtain causal estimates of the differential effects of ui in booms and recessions this article exploits the fact that in germany potential ui benefit duration is a function of exact age which is itself invariant over the business cycle we implement a regression discontinuity design separately for 20 years and correlate our estimates with measures of the business cycle we find that the nonemployment effects of a month of additional ui benefits are at best somewhat declining in recessions yet the ui exhaustion rate and therefore the additional coverage provided by ui extensions rises substantially during a downturn the ratio of these two effects represents the nonemployment response of workers weighted by the probability of being affected by ui extensions hence our results imply that the effective moral hazard effect of ui extensions is significantly lower in recessions than in booms using a model of job search with liquidity constraints we also find that in the absence of market wide effects the net social benefits from ui extensions can be expressed either directly in terms of the exhaustion rate and the nonemployment effect of ui durations or as a declining function of our measure of effective moral hazard copyright 2012 oxford university press

is internet job search still ineffective using national longitudinal survey of youth nlsy97 data for 2005 8 we find that unemployed persons who look for work online are re employed about 25 faster than comparable workers who do not search online this finding contrasts with previous results for 1998 2001 and is robust to controls for cognitive test scores and detailed indicators of internet access internet job search ijs appears to be most effective in reducing unemployment durations when used to contact friends and relatives to send out resumes or fill out applications and also to look at advertisements we detect a weak positive relationship between ijs and wage growth between jobs over the past decade the internet has been credited for substantial reductions in search frictions in markets ranging from life insurance to apartment rentals brown and goolsbee 2002 kroft and pope 2010 in contrast studies of the internet s effects on labour market matching have been few in number and on balance find little or no evidence of a friction reducing effect for example kuhn and skuterud 2004 find that unemployed workers who look for work online have longer unemployment durations than comparable non internet searchers whereas kroft and pope 2010 find no evidence that the rapid expansion of craigslist as a job search tool has affected city level unemployment rates 1 at least on the surface these results seem puzzling in view of the dramatic expansion of online job search sites as well as the general decline in communication costs associated with the internet both of these changes should increase the arrival rate of matches between job searchers and vacancies thereby reducing search frictions in labour markets in this study we provide new evidence relevant to this puzzle of ineffective internet job search ijs using data on young us jobseekers during the period 2005 8 taken from the national longitudinal survey of youth nlsy97 our main result is that internet searchers unemployment durations are about 25 shorter than comparable workers who search offline only specifically after replicating kuhn and skuterud s 2004 estimate of a counterproductive effect of ijs using their current population survey cps data from 1998 2001 for this age group we show that this counterproductive effect is reversed in the more recent period in the same regression specification this reversal holds whether or not we control for a possible source of endogenous selection searchers scores on a widely used cognitive skills test that was not available in the earlier data we speculate that improvements in technology over this period ranging from better online job sites to network externalities associated with greater overall internet penetration might explain this change over time

objective and subjective measures of fuel poverty as energy prices continue to rise to reflect the real cost of carbon the numbers of households in fuel poverty is increasing rapidly this paper uses a unique data set to explore one alternative measure of fuel poverty based on whether consumers feel able to afford their energy similar to one introduced by the government a few years ago we explore the links between an expenditure based and our subjective measure of fuel poverty and compare these differences with those between official measures amongst low income households 28 spent more than a tenth of their income on energy in the home and so would be likely to qualify as fuel poor under the most usual definition but only 16 felt unable to afford sufficient energy to keep their homes warm amongst this group who felt they had difficulty in affording sufficient energy less than half were expenditure fuel poor the paper argues that reintroduction of a self reported measure by the government would be a valuable aid to policy development

revisiting the matching function abstract there is strong empirical evidence for cobb douglas matching functions we show in this paper that this widely found relation between matches on the one hand and unemployment and vacancies on the other hand can be the result of different underlying mechanisms obviously it can be generated by assuming a cobb douglas matching function less obvious the same relationship results from a vacancy free entry condition and idiosyncratic productivity shocks a positive aggregate productivity shock leads to more vacancy posting a shift of the idiosyncratic selection cutoff and thereby more hiring we calibrate a model with both mechanisms to administrative german labor market data and show that idiosyncratic productivity for new contacts is an important driver of the elasticity of the job finding rate with respect to the market tightness accounting for idiosyncratic productivity can explain the observed negative time trend in estimated matching efficiency and asymmetric business cycle responses to large aggregate shocks

unemployment insurance and the business cycle an equilibrium model is developed to study the interaction of the business cycle unemployment insurance and the labor market for young men in canada the model combines optimal job oer layo and recall decisions within a numerically solved and restricted bayesian nash equilibrium we consider the long run implications of changes made to unemployment insurance in canada during the 1990s the changes lead to equilibrium increases in average rates of unemployment layos and recalls eliminating ui lowers the equilibrium unemployment

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

trend inflation and firms price setting rotemberg versus calvo we compare the calvo and rotemberg price setting mechanisms in a new keynesian model with trend inflation we show that the long run relationship between inflation and output is positive in rotemberg and negative in calvo the dynamics of the two models differ even to a first order approximation positive trend inflation enlarges the determinacy region in the rotemberg model whereas it shrinks it in the calvo model the responses of output and inflation to technology shocks are amplified by trend inflation in calvo whereas they are dampened in rotemberg the two models imply differing non linear adjustments after a disinflation

building a composite help wanted index abstract this paper builds a measure of vacancy posting over 1951 2009 that captures the behavior of total print and online help wanted advertising and can be used for time series analysis of the us labor market

state dependent or time dependent pricing does it matter for recent u s inflation in the 1988 2004 micro data collected by the u s bureau of labor statistics for the cpi price changes are frequent every 4 7 months depending on the treatment of sale prices and large in absolute value on the order of 10 the size and timing of price changes varies considerably for a given item but the size and probability of a price change are unrelated to the time since the last price change movements in aggregate inflation reflect movements in the size of price changes rather than the fraction of items changing price due to offsetting movements in the fraction of price increases and decreases neither leading time dependent models taylor or calvo nor 1 st generation state dependent models match all of these facts some 2 nd generation state dependent models however appear broadly consistent with the empirical patterns

definitions of fuel poverty implications for policy abstract this paper outlines why the definition of fuel poverty is important in policy formulation and describes how the government s current definitions evolved from the original concept it discusses the determination of income and fuel costs and the possibilities for a relative and common european measure it examines problems inherent in assessing fuel costs as a percentage of income and puts forward the arguments for a budget standard approach the paper illustrates how the size of the problem depends on the definition and chosen threshold and suggests advantages for a rating scale it illustrates how the income composition and thresholds also govern the distribution of the target populations and the relative importance of the main causal factors and examines the consequent policy implications it explores the definition of vulnerable households and the importance of severity and questions whether the uk fuel poverty strategy is targeted at households least able to afford their fuel costs as the name implies or primarily those at risk from excess winter and summer mortality and morbidity finally after examining the role of supplementary indicators it looks at the opportunities for changing the definition and comments on the government review of the definition and targets

unemployment fiscal multipliers we estimate the effects of fiscal policy on the labor market in us data an increase in government spending of 1 percent of gdp generates output and unemployment multipliers respectively of about 1 2 percent at one year and 0 6 percentage points at the peak each percentage point increase in gdp produces an increase in employment of about 1 3 million jobs total hours employment and the job finding probability all rise whereas the separation rate falls a standard neoclassical model augmented with search and matching frictions in the labor market largely fails in reproducing the size of the output multiplier whereas it can produce a realistic unemployment multiplier but only under a special parameterization extending the model to strengthen the complementarity in preferences to include unemployment benefits real wage rigidity and or debt financing with distortionary taxation only worsens the picture new keynesian features only marginally magnify the size of the multipliers when complementarity is coupled with price stickiness however the magnification effect can be large

heterogeneous job matches and the cyclical behavior of labor turnover abstract worker flows to and from unemployment simultaneously occur over the us business cycle and the size of the flows is positively linked to the unemployment rate unemployment flows and the unemployment rate are highly volatile persistent and countercyclical inflows lead the unemployment rate and the unemployment rate leads outflows over the business cycle the one sector stochastic growth model is augmented by matching frictions in the labor market and match specific productivity shocks that introduce ex post heterogeneous job matches matching frictions help generate the lead lag relationship between unemployment flows and the unemployment rate combined with heterogeneous job matches they generate endogenous unemployment flows and an unemployment rate whose dynamic characteristics match observed data

dynamic properties of energy affordability measures measures of affordability are applied in practice e g to assess the affordability of energy services water or housing they can be interpreted as measures of deprivation in a specific domain of consumption the large body of literature on affordability measure has little overlap with the existing literature on poverty measurement a comprehensive assessment of the response of affordability measures as a result of changes in the distribution of income or expenditure is missing this paper aims to fill this gap by providing a conceptual discussion on the dynamics of energy affordability measures several types of measures are examined in a microsimulation framework to assess their dynamic properties our results indicate that some measures exhibit odd dynamic behavior this includes measures used in practice such as the low income high cost measure and the double median of expenditure share indicator odd dynamic behavior is attributed to definitions made with respect to higher moments of the expenditure distribution definitions that rely on a percentage share of expenditure relative to income or an absolute or relative income poverty line fare well from a dynamic perspective

labor market institutions and aggregate fluctuations in a search and matching model abstract this paper explores the influence of labor market institutions on aggregate fluctuations it uses a dynamic stochastic general equilibrium model characterized by search and matching frictions in the labor market and nominal rigidities in the goods market it finds that firing costs and unemployment benefits can have substantial effects on aggregate fluctuations increasing firing costs decreases the volatility of output employment and job flows due to the reduction in the mass of jobs sensitive to disturbances and lower incentives for firms to hire and fire workers hence firms adjust to shocks mainly through prices causing inflation to become more volatile raising unemployment benefits has the reverse effect on aggregate fluctuations

dynamics and asymmetric adjustment in insider outsider models this paper analyzes the time consistent and efficient solution for wages and employment in intertemporal insider outsider models of bargaining with endogenous membership when the reservation wage is made endogenous in a general equilibrium context insider outsider models can generate a fundamental asymmetry in the adjustment of employment to the steady state while upturns are gradual severe downturns are characterized by a sharp drop in employment obtained by laying off workers further reductions in employment are achieved solely through quits copyright 1992 by royal economic society