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Endogenous Separations in a Matching Model

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  • A Newell
  • James Symons

Abstract

The paper develops a model in which employment is an enduring rent-sharing relationship. In each period rents are subject to a transient disturbance, and the parties weigh the future stream of benefits against current dis-benefits. The analysis suggests a strong correlation between real interest rates and aggregate unemployment because high real interest rates makes the employment relationship more fragile. This correlation is demonstrated for a number of time series of aggregate national data.

Suggested Citation

  • A Newell & James Symons, 1991. "Endogenous Separations in a Matching Model," CEP Discussion Papers dp0035, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0035
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