Aggregate Hours Adjustment in Frictional Labor Markets

Konferenzbeitrag

We evaluate the ability of the labor market search and matching framework to account for the variation in aggregate hours worked. The model we develop and estimate features search frictions in the labor market, capital and investment adjustment costs, as well as variable hours at the worker level. Firms and workers bargain efficiently over wages and hours worked, and relative price setting is monopolistic. Driving forces of aggregate fluctuations are assumed to be productivity, preference, markup, and investment-speci…c shocks. We estimate the model on aggregate and labor market data for the U.S. using Bayesian techniques. We find that product market (markup) shocks are important to explain aggregate employment dynamics. We explore various mechanisms that help match the hours worked/employment correlation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Understanding the Dynamics of Labor Markets ; No. D1-V2

Classification and Topics

• Classification: Wirtschaft ; Labor Turnover; Vacancies; Layoffs ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Labor Demand
• Subject: Bayesian Estimation ; Unemployment ; Vacancies ; Investment-specific Shocks

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krause, Michael ; Lubik, Thomas A.
• Event: Veröffentlichung
• (who): Verein für Socialpolitik
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/37263
• Last update: 10.03.2025, 11:44 AM CET