Working Paper: CEPR ID: DP16733
Authors: Carlos Carrillo-Tudela; Alex Clymo; Melvyn G. Coles
Abstract: This paper develops and estimates a fully microfounded equilibrium business cycle modelof the US labor market with aggregate productivity shocks. Those microfoundations are consistentwith evidence regarding the underlying distribution of firm growth rates across firms[by age and size] and, when aggregated, are consistent with macro-evidence regarding grossjob creation and job destruction flows over the cycle. By additionally incorporating on-the-jobsearch, we systematically characterise the stochastic relationships between aggregate job creationand job destruction flows across firms, gross hire and quit flows [churning] by workersacross firms, as well as the persistence and volatility of unemployment and worker job findingrates over the cycle.
Keywords: job search; firm dynamics; business cycle
JEL Codes: E24; E32; J62; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Job creation (J23) | Unemployment (J64) |
| Job destruction (J63) | Unemployment (J64) |
| Aggregate productivity shocks (O49) | Job creation (J23) |
| Aggregate productivity shocks (O49) | Job destruction (J63) |
| Quit rates (J63) | Job creation (J23) |
| Job creation (J23) | Worker reemployment rates (J68) |
| Worker reemployment rates (J68) | Job creation (J23) |