Endogenous separations, wage rigidities and employment volatility

Arbeitspapier

We show that in micro data, as well as in a search and matching model with endogenous separations and rigid wages, separations and hence employment volatility are non-neutral to wage rigidities of incumbent workers. In contrast to when all wages are flexible, the standard deviation of unemployment in a model with rigid wages for incumbent workers (only) matches the standard deviation in the data. Thus, the degree of wage rigidity for newly hired workers is not a sufficient statistic for determining the effect of wage rigidities on macroeconomic outcomes in this class of models.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Sveriges Riksbank Working Paper Series ; No. 326

Classification and Topics

• Classification: Wirtschaft ; Labor Turnover; Vacancies; Layoffs ; Unemployment: Models, Duration, Incidence, and Job Search ; Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
• Subject: Search and matching ; Unemployment volatility puzzle ; Wage rigidities ; Job Destruction

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Carlsson, Mikael ; Westermark, Andreas
• Event: Veröffentlichung
• (who): Sveriges Riksbank
• (where): Stockholm
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/157969
• Last update: 10.03.2025, 11:44 AM CET