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The Effects of the Loss of Skills on Unemployment Fluctuations

Author

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  • Julen Esteban-Pretel

    (Faculty of Economics, University of Tokyo)

Abstract

This paper studies the effects of the loss of skills on the persistence of unemployment and other macroeconomic variables. It combines a Real Business Cycle model with a search and matching labor market to explain how the loss of skill of workers and the subsequent decrease in their probability of finding new jobs creates more persistent business cycles. The paper proves that the introduction of this mechanism improves the performance of the model and is able to replicate cross country differences in unemployment and output persistence.

Suggested Citation

  • Julen Esteban-Pretel, 2005. "The Effects of the Loss of Skills on Unemployment Fluctuations," CIRJE F-Series CIRJE-F-371, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2005cf371
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2005/2005cf371.pdf
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    References listed on IDEAS

    as
    1. Marcus Hagedorn & Iourii Manovskii, 2008. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," American Economic Review, American Economic Association, vol. 98(4), pages 1692-1706, September.
    2. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    3. Stefan Eriksson, 2006. "Skill Loss, Ranking of Job Applicants and the Dynamics of Unemployment," German Economic Review, Verein für Socialpolitik, vol. 7(3), pages 265-296, August.
    4. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
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    6. Cole, Harold L & Rogerson, Richard, 1999. "Can the Mortensen-Pissarides Matching Model Match the Business-Cycle Facts?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 933-959, November.
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    8. Krause, M.U. & Lubik, T.A., 2004. "On-the-job Search and the Cyclical Dynamics of the Labor Market," Other publications TiSEM 08a72137-ff72-4e18-add3-1, Tilburg University, School of Economics and Management.
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    12. Wouter J. den Haan & Christian Haefke & Garey Ramey, 2005. "Turbulence And Unemployment In A Job Matching Model," Journal of the European Economic Association, MIT Press, vol. 3(6), pages 1360-1385, December.
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    16. Hector Sala & José I. Silva, 2005. "The relevance of Post-Match LTC: Why has the Spanish labor market become as volatile as the US one?," Working Papers wpdea0515, Department of Applied Economics at Universitat Autonoma of Barcelona.
    17. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
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    20. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-132, March.
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    Cited by:

    1. Khalifa, Sherif, 2015. "Learning-by-doing and unemployment dynamics," Economic Modelling, Elsevier, vol. 44(C), pages 180-187.
    2. Julen Esteban-Pretel & Elisa Faraglia, 2005. "Monetary Shocks in a Model with Loss of Skills," CIRJE F-Series CIRJE-F-380, CIRJE, Faculty of Economics, University of Tokyo.

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