Data and Code for: A Congestion Theory of Unemployment Fluctuations

Principal Investigator(s): View help for Principal Investigator(s) Yusuf Mercan, The University of Melbourne; Benjamin Schoefer, University of California, Berkeley; Petr Sedláček , The University of New South Wales

Version: View help for Version V1

Name	File Type	Size	Last Modified
Replication Package			05/23/2023 07:11:AM

Project Citation:

Mercan, Yusuf, Schoefer, Benjamin, and Sedlácek , Petr. Data and Code for: A Congestion Theory of Unemployment Fluctuations. Nashville, TN: American Economic Association [publisher], 2023. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2023-12-15. https://doi.org/10.3886/E181721V1

Project Description

Summary:

We propose a theory of unemployment fluctuations in which new hires and incumbent workers are imperfect substitutes. Hence, attempts to hire away the unemployed during recessions diminish the marginal product of new hires, discouraging job creation. This single feature achieves a ten-fold increase in the volatility of hiring in an otherwise standard search model, produces a realistic Beveridge curve despite countercyclical separations, and explains 30–40% of US unemployment fluctuations. Additionally, it explains the excess procyclicality of new hires’ wages, the cyclical labor wedge, countercyclical earnings losses from job displacement, and the limited steady-state effects of unemployment insurance.

Scope of Project

Subject Terms: unemployment rate; worker flows; current population survey

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      J31 Wage Level and Structure; Wage Differentials
      J63 Labor Turnover; Vacancies; Layoffs
      J64 Unemployment: Models, Duration, Incidence, and Job Search

Geographic Coverage: United States

Time Period(s): 1976 – 2019

Collection Date(s): 1976 – 2019

Universe:

Adult noninstitutionalized population of the United States living in households.

Data Type(s): aggregate data; survey data

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Published Versions

V1 [2023-12-15]

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