moral hazard in lending and labor market volatility when the economy experiences a sharp economic downturn credit spreads widen and project financing costs for firms rise as funding sources begin to dry up the economy experiences a lengthy recovery with unemployment rates slow to return to full employment levels we develop a model that displays these features it relies on an interaction between labor search frictions and firm level moral hazard that is accentuated during recessions the model is capable of addressing the shimer puzzle with labor market variables exhibiting significantly more volatility on average as a result of the heightened moral hazard concerns during these episodes that significantly deepen and prolong periods of high unemployment as vacancy postings fall dramatically and the job finding rate declines our mechanism is also found to induce internal shock propagation causing the peak response of output unemployment and wages to occur with a several quarter delay relative to a model without such frictions many other labor market variables also show slower recovery their return to preshock level occurs at a slower pace for a number of periods after the peak response

unemployment and the coverage extension of collective wage agreements abstract this paper examines how the extension of collective wage bargaining agreements to non unionized firms affects unemployment testing a large number of econometric specifications on data from 15 oecd countries observed between 1965 and 2007 we find a positive significant and robust interaction between the tax wedge and the degree of coverage extension of collective wage bargaining agreements more specifically our results suggest that the tax wedge has a larger positive effect on unemployment than any other labour market policy in countries with wide extension of collective wage agreements coverage such as france or spain conversely in countries where coverage extension is close to zero as in nordic countries unemployment is essentially insensitive to changes in the tax wedge

the ins and outs of european unemployment in this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three european countries the united kingdom france and spain all countries are interesting in their own right and in the comparison with each other britain s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then france is still a regulated economy compared with britain with unemployment averaging about 8 spain has had the biggest rise in unemployment in europe reaching 24 in the mid 1990s but policy reforms and fast growth since then brought it down to a level below france s we compare performance in these three countries making use of both administrative and labor force survey data we find that the impact of the 1980s reforms in britain is evident in the contributions of the inflow and outflow rates the inflow rate became a bigger contributor after the mid 1980s although its significance subsided again in the late 1990s and 2000s in france the dynamics of unemployment are driven by the outflow rate virtually entirely which is consistent with a regime with strict employment protection legislation in spain however both rates contribute significantly to the dynamics perhaps as a consequence of the prominence of fixed term contracts since the late 1980s

the ins and outs of uk unemployment this study shows that in the uk increases in unemployment in a recession are driven by rises in the separation rate a new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times this is important because low uk transition rates one quarter the size of the us imply substantial deviation of unemployment from steady state near cyclical turning points in periods of moderation the job finding rate is shown to have most influence on uk unemployment dynamics evidence comes from the first study of monthly data derived from individuals labour market spells recorded in the british household panel survey from 1988 to 2008

the ins and outs of unemployment in canada 1976 2008 this paper studies the flows into and out of unemployment in canada at an aggregate and a number of disaggregated levels i find that inflows into unemployment are countercyclical and outflows are procyclical at an aggregate level changes in the rate at which individuals leave unemployment account for most of the changes in unemployment rates in canada between 1976 and 2008 however flows into unemployment matter more at some disaggregated levels there are also some differences in the contributions of flows into and out of unemployment to changes in unemployment rates across the 1981 82 and 1990 92 recessions ce texte etudie les entrees et sorties du chomage au canada au niveau agrege et a un certain nombre de niveaux de desagregation on decouvre que les entrees en chomage sont contre cycliques et les sorties pro cycliques au niveau agrege les changements dans le taux de sorties du chomage expliquent le gros des changements dans les taux de chomage au canada entre 1976 et 2008 cependant les flux a l entree sont plus importants a certains niveaux de desagregation on note aussi des differences dans la contribution des flux a l entree et a la sortie du chomage aux changements dans les taux de chomage au cours des recessions de 1981 82 et de 1990 92

the cyclicality of labor market flows a multiple shock approach abstract in this paper we aim to establish some stylized facts about the relative contributions of the job finding and separation rates to unemployment dynamics depending on the nature of structural shocks the shocks in our bayesian structural var model are identified using a sign restriction approach and capture shifts in the three conditions determining labor market equilibrium in matching models the beveridge curve and the job creation and job destruction conditions using both us and french data we identify an aggregate shock to match profitability the aggregate profitability shock a shock specific to existing jobs the reallocation shock and a shock to the efficiency of the matching process the matching efficiency shock we find that the relative contributions of the job finding and separation rates are notably different across shocks in both countries but are similar across countries for each type of shock labor market dynamics appear to be transatlantic despite well known institutional differences however it must be emphasized that the reaction of the labor market variables to the matching efficiency shock seems more muted in the us than in france

modelling the dynamics of regional employment population ratios and their commonality this paper looks at movements over time in regional employment population ratios an important and much neglected determinant of regional performance we utilise data on gross flows into and out of employment and focus on information contained in the transition rates the paper applies an unobserved components econometric model to a panel of australian data to identify and explain the evolution of regional employment population ratios over time the approach identifies a common i e nationwide factor while allowing for region specific effects including region specific impacts of the common factor the contribution of the common factor to changes in regional employment population ratios ranges between 38 and 80 conversely regional elements explain between 20 and 62 of changes the findings highlight the importance of adopting explicit regional employment policies as a complement to national policy

forecasting unemployment across countries the ins and outs abstract this paper evaluates the flow approach to unemployment forecasting proposed by barnichon and nekarda 2012 for a set of oecd countries characterized by very different labor markets we find that the flow approach yields substantial improvements in forecast accuracy over professional forecasts for all countries with especially large improvements at longer horizons one year ahead forecasts for european countries moreover the flow approach has the highest predictive ability during recessions and turning points when unemployment forecasts are most valuable

time variation in the dynamics of worker flows evidence from north america and europe vector autoregressive methods have been used to model the interrelationships between job vacancy rates job separation rates and job finding rates using tools such as impulse response analysis we investigate whether such impulse responses change across the business cycle or over time by estimating time varying parameter vector autoregressions for data from north america the usa and canada and europe france spain and the uk while the adjustment process of the labour market to shocks in canada and the usa is similar we find the adjustment process differs much more across the european countries with greater persistence in shocks relative to the usa and canada

the role of worker flows in the dynamics and distribution of uk unemployment unemployment varies substantially over time and across sub groups of the labour market worker flows among labour market states act as key determinants of this variation we examine how the structure of unemployment across groups and its cyclical movements across time are shaped by changes in labour market flows using novel estimates of flow transition rates for the uk over the last 35 years we decompose unemployment variation into parts accounted for by changes in rates of job loss job finding and flows via non participation close to two thirds of the volatility of unemployment in the uk over this period can be traced to rises in rates of job loss that accompany recessions the share of this inflow contribution has been broadly the same in each of the past three recessions decreased job finding rates account for around one quarter of unemployment cyclicality and the remaining variation can be attributed to flows via non participation digging deeper into the structure of unemployment by gender age and education the flow approach is shown to provide a richer understanding of the unemployment experiences across population sub groups

vacancy posting job separation and unemployment fluctuations abstract what is the relative importance of hiring and separation in driving unemployment fluctuations this paper presents a framework to decompose the moments of unemployment and study the respective contributions of vacancy posting a measure of firms hiring efforts and separation separation accounts for about 40 of unemployment s variance compared to 60 for vacancy posting and contributes to about 60 of unemployment steepness asymmetry the fact that unemployment increases faster than it decreases further while vacancy posting is on average the most important contributor of unemployment fluctuations the opposite is true around business cycle turning points when separation is responsible for most of unemployment movements

on the determinants of uk unemployment and the great recession analysing the gross flows data this article provides a detailed analysis of the gross worker flows data in the united kingdom between 1997 and 2010 with particular emphasis on the 2008 2009 recession and its aftermath utilizing flows data from the labour force survey lfs the dominant macroeconomic factors driving unemployment in the united kingdom before during and after the recessionary period are identified amongst the salient findings of this article is a striking decline in job to job movements throughout and beyond the recent recession this discovery adds a new dimension to the existing literature in this field

sclerosis and large volatilities two sides of the same coin abstract the labor market in germany is more sclerotic and volatile than in the us we show theoretically that sclerosis and large volatilities are two sides of the same coin both may be driven by large hiring costs and low quit rates

labor market regulations and cross border mergers and acquisitions this article exploits changes in country level employment protection regulations as a source of plausibly exogenous variation in labor laws and finds that these regulations play an important role in cross border merger activity over the 1991 2009 period countries that tighten employment regulations attract more foreign acquirers especially those from countries with relatively more flexible labor regulations the results appear to be robust to alternative specifications importantly these patterns are pronounced in those recipient country sectors in which foreign acquirers may find attractive targets at bargain prices sectors with relatively high productivity and skill the article also provides evidence suggesting that because pro labor reforms allow foreign acquirers to cherry pick more skilled and productive local firms these transactions are associated with greater deal synergies and improved post merger operating performance

the cyclicality of the separation and job finding rates in france abstract in this paper we shed light on the relative contribution of the separation and job finding rates to french unemployment at business cycle frequencies by using administrative data on registered unemployment and labor force surveys we first investigate the fluctuations in steady state unemployment and then in current unemployment in order to take into account the unemployment deviations from equilibrium both data sets lead to quite similar results both rates contributed to unemployment fluctuations during the nineties 50 50 split while in the last decade the job finding rate was more significant and explained around 65 of the french unemployment fluctuations in particular the last business cycle episode including the last recession exacerbated the role of the job finding rate we then show that the predominant role of the job finding rate in the last decade holds when the economy is hit by aggregate business cycle shocks moving unemployment and vacancies along the beveridge curve

productivity growth on the job search and unemployment abstract the impact of long run productivity growth on unemployment is studied we incorporate disembodied technological progress and on the job search into the endogenous job separation model of mortensen and pissarides 1994 because we include on the job search faster growth reduces unemployment by decreasing job separation and inducing job creation the incorporation of on the job search substantially improves the ability of the mortensen and pissarides model to explain the effect of growth on labor market variables specifically our model generates not only an empirically consistent sign of the effect but also a larger impact of growth on unemployment than the standard matching model

the establishment level behavior of vacancies and hiring this paper is the first to study vacancies hires and vacancy yields at the establishment level in the job openings and labor turnover survey a large sample of u s employers to interpret the data we develop a simple model that identifies the flow of new vacancies and the job filling rate for vacant positions the job filling rate moves counter to aggregate employment but rises steeply with employer growth rates in the cross section it falls with employer size rises with worker turnover rates and varies by a factor of four across major industry groups we also develop evidence that the employer level hiring technology exhibits constant returns and that at the employer level and that employers rely heavily on other instruments in addition to vacancies as they vary hires we also develop evidence that effective recruiting intensity per vacancy varies over time accounting for about 41 of movements in aggregate hires in the 2007 to 2009 period our evidence and analysis provide useful inputs for assessing developing and calibrating theoretical models of search matching and hiring in the labor market

how the ins and outs shape differently the u s unemployment over time and across frequencies abstract although the u s case has been studied extensively the importance of job finding and separation rates to unemployment variability remains unsettled the aim of this paper is to contribute to this debate by adopting a novel lens wavelet analysis we resort to wavelet analysis to unveil time and frequency varying features regarding the contribution of the job finding and job separation rates for the u s unemployment rate dynamics drawing on this approach we are able to reconcile some apparently contradictory findings reported in previous literature we find that the job finding rate is more influential for the overall unemployment behaviour but the job separation rate also plays a critical role especially during recessions in particular the job separation rate accounts for on average 53 per cent of the unemployment variability at short run fluctuations during recessions in sharp contrast with an overall contribution of 21 per cent over time and across frequencies

unemployment in the great recession this paper studies the responses of unemployment in germany the united states and britain to the great recession of 2008 09 by making use of beveridge curve analysis and in the entire oecd with other techniques it is shown that britain suffered from recession but no structural problems the united states suffered from structural unemployment during the recovery germany exhibited a much better performance both during and after the recession the rise in oecd unemployment is broken down into parts due to aggregate activity the construction sector and a residual attributed to policies and institutions which is used to reach conclusions about policy

the link between growth volatility and technical progress cross country evidence abstract this paper provides strong evidence showing that the rate of technical progress plays an important role in stabilizing business cycle volatility empirical tests consistently indicate that business cycle volatility diminishes with increasing rates of technical progress using alternative estimates of technical progress and datasets do not alter the conclusion

the effect of shocks to labour market flows on unemployment and participation rates this article presents an analysis of labour market dynamics in particular of flows in the labour market and how they interact and affect the evolution of unemployment rates and participation rates the two main indicators of labour market performance our analysis has two special features first apart from the two labour market states employment and unemployment we consider a third state out of the labour force second we study net rather than gross flows where net refers to the balance of flows between any two labour market states distinguishing a third state is important because the labour market flows to and from that state are quantitatively important focusing on net flows simplifies the complexity of interactions between the flows and allows us to perform a dynamic analysis in a structural vector autoregression framework we find that a shock to the net flow from unemployment to employment drives the unemployment rate and the participation rate in opposite directions while a shock to the