Replication data for: Do Job Destruction Shocks Matter in the Theory of Unemployment?

Principal Investigator(s): View help for Principal Investigator(s) Melvyn G. Coles; Ali Moghaddasi Kelishomi

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Project Citation:

Coles, Melvyn G., and Moghaddasi Kelishomi, Ali. Replication data for: Do Job Destruction Shocks Matter in the Theory of Unemployment? Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114111V1

Project Description

Summary: Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated Method of Moments (SMM) finds the vacancy creation process is less than infinitely elastic. Because a recession-leading job separation shock then causes vacancies to fall as unemployment increases, the ad hoc restriction to zero job separation shocks (to generate Beveridge curve dynamics) becomes redundant. In contrast to standard arguments, the calibrated model finds the job separation process drives unemployment volatility over the cycle.

Scope of Project

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      J24 Human Capital; Skills; Occupational Choice; Labor Productivity
      J63 Labor Turnover; Vacancies; Layoffs
      J64 Unemployment: Models, Duration, Incidence, and Job Search

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Published Versions

V1 [2019-10-12]

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