Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253541 
Year of Publication: 
2022
Series/Report no.: 
FAU Discussion Papers in Economics No. 03/2022
Publisher: 
Friedrich-Alexander-Universität Erlangen-Nürnberg, Institute for Economics, Nürnberg
Abstract: 
This paper shows that a search and matching model with idiosyncratic training cost shocks can explain the asymmetric movement of the job-finding rate over the business cycle and the decline of matching efficiency in recessions. Large negative aggregate shocks move the hiring cutoff into a part of the training cost distribution with higher density. The position of the hiring cutoff in the distribution is disciplined by the empirical elasticity of the job-finding rate with respect to market tightness. Our model explains a large fraction of the matching efficiency decline during the Great Recession and generates state-dependent effects of policy interventions.
Subjects: 
Business cycle asymmetries
matching function
Beveridge curve,job-finding rate
unemployment
effectiveness of policy
JEL: 
E24
E32
J63
J64
Document Type: 
Working Paper

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