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Long Live the Vacancy

Author

Listed:
  • Christian Haefke
  • Michael Reiter

    (Division of Social Science)

Abstract

We reassess the role of vacancies in a Diamond-Mortensen-Pissarides style search and matching model. In the absence of free entry long lived vacancies and endogenous separations give rise to a vacancy depletion channel which we identify via joint unemployment and vacancy dynamics. We show conditions for constrained efficiency and discuss important implications of vacancy longevity for modeling and calibration, in particular regarding match cyclicality and wages. When calibrated to the postwar US economy, the model explains not only standard deviations and autocorrelations of labor market variables, but also their dynamic correlations with only one shock. JEL codes: E24, E32, J63, J64

Suggested Citation

  • Christian Haefke & Michael Reiter, 2020. "Long Live the Vacancy," Working Papers 20200054, New York University Abu Dhabi, Department of Social Science, revised Sep 2020.
    • Handle: RePEc:nad:wpaper:20200054
    as

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    References listed on IDEAS

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    1. Andreas I Mueller & Damian Osterwalder & Josef Zweimüller & Andreas Kettemann, 2024. "Vacancy Durations and Entry Wages: Evidence from Linked Vacancy–Employer–Employee Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1807-1841.
    2. Melvyn G. Coles & Ali Moghaddasi Kelishomi, 2018. "Do Job Destruction Shocks Matter in the Theory of Unemployment?," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 118-136, July.
    3. Amaral, Pedro S. & Tasci, Murat, 2016. "The cyclical behavior of equilibrium unemployment and vacancies across OECD countries," European Economic Review, Elsevier, vol. 84(C), pages 184-201.
    4. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    5. Vuillemey, Guillaume & Wasmer, Etienne, 2020. "Frictional unemployment with stochastic bubbles," European Economic Review, Elsevier, vol. 122(C).
    6. Lars Ljungqvist & Thomas J. Sargent, 2017. "The Fundamental Surplus," American Economic Review, American Economic Association, vol. 107(9), pages 2630-2665, September.
    7. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    8. Silva, José Ignacio & Toledo, Manuel, 2009. "Labor Turnover Costs And The Cyclical Behavior Of Vacancies And Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S1), pages 76-96, May.
    9. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
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    Cited by:

    1. Miroslav Gabrovski & Mario Rafael Silva, 2023. "Unemployment and Labor Productivity Co-movement: the Role of Firm Exit," Working Papers 202301, University of Hawaii at Manoa, Department of Economics.

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    More about this item

    JEL classification:

    • 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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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