A note on labor-search models
Bogazici Journal, cilt.31, sa.2, 2017 (Scopus, TRDizin)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 31 Sayı: 2
- Basım Tarihi: 2017
- Doi Numarası: 10.21773/boun.31.2.3
- Dergi Adı: Bogazici Journal
- Derginin Tarandığı İndeksler: Scopus, TR DİZİN (ULAKBİM)
- Anahtar Kelimeler: Labor market tightness, Schmitt-grohé and uribe algorithm, Shimer's puzzle
- Açık Arşiv Koleksiyonu: AVESİS Açık Erişim Koleksiyonu
- Boğaziçi Üniversitesi Adresli: Evet
Özet
In this paper, I revisit the "Shimer puzzle" by comparing business-cycle properties of three prominent laborsearch models. Providing a standard framework for contrasting the three models, I first quantify the sensitivity of Shimer (2005)'s relative labor market tightness volatility to business cycle smoothing parametrization. Second, I document that Hagedorn and Manovskii (2008)'s proposed solution to the Shimer puzzle depends considerably on whether value of nonmarket activity responds to business cycle fluctuations. Third, I report that when specified in the form of a decreasing-returns-to-scale functional form, the incorporation of decreasing average vacancy posting costs by Pissarides (2009) cannot generate decent business-cycle volatilities in the absence of further wage stickiness. Overall, all my findings point to the particular need for exploring on the degree of co-movement between wage rate and nonmarket activity in labor-search modelling attempts.