A Congestion Theory of Unemployment Fluctuations
Yusuf Mercan, Benjamin Schoefer, Petr Sedláček
American Economic Journal: Macroeconomics,
No. 1,
2024
Abstract
We propose a theory of unemployment fluctuations in which newhires and incumbentworkers are imperfect substitutes. Hence, attempts to hire away the unemployed during recessions diminish the marginal product of new hires, discouraging job creation. This single feature achieves a ten-fold increase in the volatility of hiring in an otherwise standard search model, produces a realistic Beveridge curve despite countercyclical separations, and explains 30–40% of U.S. unemployment fluctuations. Additionally, it explains the excess procyclicality of new hires’ wages, the cyclical labor wedge, countercyclical earnings losses from job displacement, and the limited steady-state effects of unemployment insurance.
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AIECE General Report, Part 2, Spring 2023
Andrej Drygalla, Axel Lindner, Birgit Schultz
IWH Studies,
No. 4,
2023
Abstract
The Halle Institute for Economic Research (IWH) is a member of AIECE (Association d'Instituts Europeens de Conjoncture Economique/Association of European Conjuncture Institutes), an association of independent European institutes involved in surveying economic conditions and developments, and in short-term macroeconomic forecasting. The main objective of the Association is to stimulate the exchanges between its members with a view to improve their insight into international economic developments. This ranges from the exchange of statistical or institutional information to discussions on economic policy Guidelines to common research activities. The AIECE organises between its members an exchange of view, of information and of literature on international economic developments, in particular in Europe. The Association provides the framework for joint activities of its members in areas of common interest. Its structure allows its members to develop common views on the future cyclical development. In order to meet these objectives the Association has half-yearly plenary meetings, centred around a general report on the European conjuncture prepared in turn by one of the members in cooperation with the other member institutes, but also with discussions of the working group reports and of special surveys prepared by member institutes. In Spring 2023, the report was written by the Halle Institute for Economic Research (IWH).
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AIECE General Report, Part 1, Spring 2023
Andrej Drygalla, Axel Lindner, Birgit Schultz
IWH Studies,
No. 3,
2023
Abstract
The Halle Institute for Economic Research (IWH) is a member of AIECE (Association d'Instituts Europeens de Conjoncture Economique/Association of European Conjuncture Institutes), an association of independent European institutes involved in surveying economic conditions and developments, and in short-term macroeconomic forecasting. The main objective of the Association is to stimulate the exchanges between its members with a view to improve their insight into international economic developments. This ranges from the exchange of statistical or institutional information to discussions on economic policy Guidelines to common research activities. The AIECE organises between its members an exchange of view, of information and of literature on international economic developments, in particular in Europe. The Association provides the framework for joint activities of its members in areas of common interest. Its structure allows its members to develop common views on the future cyclical development. In order to meet these objectives the Association has half-yearly plenary meetings, centred around a general report on the European conjuncture prepared in turn by one of the members in cooperation with the other member institutes, but also with discussions of the working group reports and of special surveys prepared by member institutes. In Spring 2023, the report was written by the Halle Institute for Economic Research (IWH).
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Why is Unemployment so Countercyclical?
Lawrence J. Christiano, Martin S. Eichenbaum, Mathias Trabandt
Review of Economic Dynamics,
July
2021
Abstract
We argue that wage inertia plays a pivotal role in allowing empirically plausible variants of the standard search and matching model to account for the large countercyclical response of unemployment to shocks.
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Do Employers Have More Monopsony Power in Slack Labor Markets?
Boris Hirsch, Elke J. Jahn, Claus Schnabel
ILR Review,
No. 3,
2018
Abstract
This article confronts monopsony theory’s predictions regarding workers’ wages with observed wage patterns over the business cycle. Using German administrative data for the years 1985 to 2010 and an estimation framework based on duration models, the authors construct a time series of the labor supply elasticity to the firm and estimate its relationship to the unemployment rate. They find that firms possess more monopsony power during economic downturns. Half of this cyclicality stems from workers’ job separations being less wage driven when unemployment rises, and the other half mirrors that firms find it relatively easier to poach workers. Results show that the cyclicality is more pronounced in tight labor markets with low unemployment, and that the findings are robust to controlling for time-invariant unobserved worker or plant heterogeneity. The authors further document that cyclical changes in workers’ entry wages are of similar magnitude as those predicted under pure monopsonistic wage setting.
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Prospects for 2002: Waiting for the cyclical change
Wirtschaft im Wandel,
No. 1,
2002
Abstract
Mit dem Jahresausblick für 2002 wird die ausführliche Konjunkturprognose von Mitte 2001 für das Jahr 2002 aktualisiert. Zu Beginn des Jahres 2002 gibt es nach sechs Quartalen Abschwung noch keine klaren Anzeichen für eine baldige Belebung der Konjunktur in Deutschland. Es fehlen Impulse aus dem Inland wie Ausland für eine schnelle Umkehr der abwärts gerichteten konjunkturellen Grundtendenz. In der Prognose wird davon ausgegangen, dass sich die US-Wirtschaft spätestens im Frühjahr aus der Rezession löst und Impulse auf die Weltwirtschaft aussendet. Dann wird sich auch in Deutschland und in der Eurozone insgesamt die Produktion beleben und in der zweiten Jahreshälfte an Schwung gewinnen. Der Anstieg der Exporte wird auf die Inlandsnachfrage ausstrahlen. Die Kräftigung der Konjunktur wird erst mit der üblichen Verzögerung am Arbeitsmarkt ankommen. Die expansiv ausgerichtete Geldpolitik wird ihre Wirkung voll entfalten. Die Finanzpolitik wird restriktiv wirken, da sie den Konsolidierungskurs verschärft.
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