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They Are Even Larger! More (on) Puzzling Labor Market Volatilities

Author

Listed:
  • Gartner, Hermann

    (Institute for Employment Research (IAB), Nuremberg)

  • Merkl, Christian

    (University of Erlangen-Nuremberg)

  • Rothe, Thomas

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

This paper shows that the German labor market is more volatile than the US labor market. Specifically, the volatility of the cyclical component of several labor market variables (e.g., the job-finding rate, labor market tightness, and job vacancies) divided by the volatility of labor productivity is roughly twice as large as in the United States. We derive and simulate a simple dynamic labor market model with heterogeneous worker productivity. This model is able to explain the higher German labor market volatilities by a longer expected job duration.

Suggested Citation

  • Gartner, Hermann & Merkl, Christian & Rothe, Thomas, 2009. "They Are Even Larger! More (on) Puzzling Labor Market Volatilities," IZA Discussion Papers 4403, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4403
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    job-finding rate; labor market volatilities; unemployment; worker flows; vacancies; market tightness;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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