Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230387
Authors: 
Faccini, Renato
Melosi, Leonardo
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 2020-09
Abstract: 
We study a model in which firms compete to retain and attract workers searching on the job. A drop in the rate of on-the-job search makes such wage competition less likely, reducing expected labor costs and lowering inflation. This model explains why inflation has remained subdued over the last decade, which is a conundrum for general equilibrium models and Phillips curves. Key to this success is the observed slowdown in the recovery of the employment-to-employment transition rate in the last five years, which is interpreted by the model as a decline in the share of employed workers searching for a job. This fall in the on-the-job search rate is corroborated by the micro data.
Subjects: 
Missing inflation
job ladder
cyclical misallocation
labor market slack
Phillips curve
JEL: 
E31
E24
C78
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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