Vacancy Posting, Job Separation And Unemployment Fluctuations

This paper studies the relative importance of the two main determinants of cyclical unemployment fluctuations: vacancy posting and job separation. Using a matching function to model the flow of new jobs, the author draws on Shimer's (2007) unemployment flow rates decomposition and finds that job separation and vacancy posting respectively account for about 40 and 60 percent of unemployment's variance. When considering higher-order moments, the author finds that job separation contributes to about 60 percent of unemployment steepness asymmetry, a stylized fact of the jobless rate.