The ins and outs of unemployment : an analysis conditional on technology shocks
Title: The ins and outs of unemployment : an analysis conditional on technology shocks
Citation: The economic journal, 2013, Vol. 123, No. 569, pp. 515-539
We analyse how unemployment, job-finding and job-separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of it volatility; investment-specific shocks expand employment and hours worked and contribute to hours worked volatility. Movements in the job-separation rates are responsible for the impact response of unemployment while job-finding rates for movements along its adjustment path. The evidence warns against using models with exogenous separation rates and challenges the conventional way of modelling technology shocks in search and sticky price models.
Article first published online on October 10, 2012
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