Data and Code for: Learning on the Job and the Cost of Business Cycles

Principal Investigator(s): View help for Principal Investigator(s) Karl Walentin, Sveriges Riksbank; Andreas Westermark, Sveriges Riksbank

Version: View help for Version V1

Name	File Type	Size	Last Modified
Alternative_Benefits_shortened_for_AEJM			06/01/2021 12:52:PM
Baseline_S_loop_corr_shortened_for_AEJM			06/02/2021 09:33:AM
Betta_05_shortened_for_AEJM			06/02/2021 09:57:AM
Cpp_files			03/19/2021 05:25:AM
Larger_x_grid_1_2_factor_shortened_for_AEJM			03/19/2021 05:29:AM
Unix-mex_files			03/19/2021 05:30:AM
Windows-mex_files			03/19/2021 05:32:AM

Project Description

Summary: We show that business cycles reduce welfare through a decrease in the average level of employment in a labor market search model with learning on-the-job and skill loss during unemployment. Empirically, unemployment and the job finding rate are negatively correlated. Since new jobs are the product of these two from the employment transition equation, business cycles imply fewer news jobs. Learning on-the-job implies that the resulting decrease in employment reduces aggregate human capital. This reduces incentives to post vacancies, further decreasing employment and human capital. We quantify this mechanism and find large output and welfare costs of business cycles.

Scope of Project

Subject Terms: Labor market

JEL Classification:
E32 Business Fluctuations; Cycles
J64 Unemployment: Models, Duration, Incidence, and Job Search

Geographic Coverage: U.S.

Universe: Adult humans

Data Type(s): aggregate data

Collection Notes: All data sets used are publicly available with the exception of job finding rate data provided by Shigeru Fujita. This dataset is is generated using Current Population Survey data, which are publicly available.

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Published Versions

V1 [2022-09-30]

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