Productivity And Job Flows: Heterogeneity Of New Hires And Continuing Jobs In The Business Cycle

This paper focuses on tenure driven productivity dynamics of a firm-worker match as a potential explanation of "Unemployment volatility puzzle". The authors let new matches and continuing jobs differ by their productivity levels and by their sensitivity to aggregate productivity shocks. As a result, new matches have a higher destruction rate and lower, but more volatile, wages than old matches, as new hires receive technology associated with the latest vintage. Their contribution is to produce model driven stickiness of old jobs' wages which does not rely on ad hoc assumptions on wage rigidity.

Provided by: European Central Bank Topic: Software Date Added: Aug 2009 Format: PDF

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