Productivity and job flows : heterogeneity of new hires and continuing jobs in the business cycle
Kilponen, Juha; Vanhala, Juuso (08.05.2009)
Numero
15/2009Julkaisija
Bank of Finland
2009
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-20140807544Tiivistelmä
This paper focuses on productivity dynamics of a firm-worker match as a potential explanation for the 'unemployment volatility puzzle'. We let new matches and continuing jobs differ in terms of productivity level and sensitivity to aggregate productivity shocks. As a result, new matches have a higher destruction rate and lower, but more volatile, wages than old matches, as new hires receive technology associated with the latest vintage. In our model, an aggregate productivity shock generates a persistent productivity difference between the two types of matches, creating an incentive to open new productive vacancies and to destroy old matches that are temporarily less productive. The model produces a well behaved Beveridge curve, despite endogenous job destruction and more volatile vacancies and unemployment, without needing to rely on differing wage setting mechanisms for new and continuing jobs. Keywords: matching, productivity shocks, new hires, continuing jobs, job flows, Beveridge curve, vintage structure JEL classification numbers: E24, E32, J64
Julkaisuhuomautus
Published in Scandinavian Journal of Economics, Volume 116, Issue 4:1068–1090, October 2014