Ellington, M., Martin, C. and Wang, B. (2021) Search frictions and evolving labour market dynamics. Journal of Economic Dynamics and Control, 127. 104104. ISSN 0165-1889
Abstract
This paper puts Search Frictions models under novel empirical scrutiny. To capture changing dynamics, we fit a Bayesian time-varying parameter VAR to US labour market data from 1965–2016. Using a DSGE model with Search Frictions, we identify several structural shocks, including a shock to worker bargaining power that we name a wage shock. We argue that the wage shock is a key driver of cyclical variation, explaining a higher proportion of the variation of these variables than productivity, demand or job separation shocks. We also document stark differences between empirical and theoretical impulse response functions that cast doubt on the core transmission mechanism of search and matching models.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2021 Published by Elsevier B.V. This is an author produced version of a paper subsequently published in Journal of Economic Dynamics and Control. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | time-varying parameter model; real wages; search frictions |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 23 Nov 2021 14:28 |
Last Modified: | 21 Apr 2023 00:13 |
Status: | Published |
Publisher: | Elsevier BV |
Refereed: | Yes |
Identification Number: | 10.1016/j.jedc.2021.104104 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:180781 |