Labor Markets and Business Cycles

Business & Finance, Career Planning & Job Hunting, Labor, Economics, Theory of Economics
Cover of the book Labor Markets and Business Cycles by Robert Shimer, Princeton University Press
View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart
Author: Robert Shimer ISBN: 9781400835232
Publisher: Princeton University Press Publication: April 12, 2010
Imprint: Princeton University Press Language: English
Author: Robert Shimer
ISBN: 9781400835232
Publisher: Princeton University Press
Publication: April 12, 2010
Imprint: Princeton University Press
Language: English

Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles.

The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics.

Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.

View on Amazon View on AbeBooks View on Kobo View on B.Depository View on eBay View on Walmart

Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles.

The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics.

Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.

More books from Princeton University Press

Cover of the book Euler's Gem by Robert Shimer
Cover of the book John Adams and the Fear of American Oligarchy by Robert Shimer
Cover of the book Collected Works of C.G. Jung, Volume 2 by Robert Shimer
Cover of the book Trading Barriers by Robert Shimer
Cover of the book Lydia Ginzburg's Prose by Robert Shimer
Cover of the book The Fall and Rise of the Islamic State by Robert Shimer
Cover of the book Impossible? by Robert Shimer
Cover of the book Falling Behind? by Robert Shimer
Cover of the book Dragonflies and Damselflies by Robert Shimer
Cover of the book The Rhetorical Presidency by Robert Shimer
Cover of the book How Terrorism Ends by Robert Shimer
Cover of the book Strategic Investment by Robert Shimer
Cover of the book Utopian Generations by Robert Shimer
Cover of the book The Case against Education by Robert Shimer
Cover of the book Kierkegaard's Muse by Robert Shimer
We use our own "cookies" and third party cookies to improve services and to see statistical information. By using this website, you agree to our Privacy Policy