scispace - formally typeset
Open AccessJournal ArticleDOI

Business Cycles With Costly Search and Recruiting

Peter Howitt
- 01 Feb 1988 - 
- Vol. 103, Iss: 1, pp 147-165
TLDR
In this article, a business cycle model is developed in which output is traded on Lucas-Phelps islands and labor services on each island are exchanged through costly search and recruiting with transactions externalities.
Abstract: 
A business cycle model is developed in which output is traded on Lucas-Phelps islands and labor services on each island are exchanged through costly search and recruiting with transactions externalities. The model exhibits persistent involuntary unemployment and inefficient equilibria, even though there are no nominal rigidities and no unexploited privately attainable gains from trade. It also exhibits employment fluctuations without any real-wage fluctuations. It yields a Lucas aggregate-supply curve (to a linear approximation). It also implies that the natural rate of unemployment depends positively upon the variability and persistence of relative price shocks.

read more

Content maybe subject to copyright    Report

Western University
Scholarship@Western
Department of Economics Research Reports Economics Working Papers Archive
1984
Business Cycles with Costly Search and Recruiting
Peter Howi
Follow this and additional works at: h3ps://ir.lib.uwo.ca/economicsresrpt
Part of the Economics Commons
Citation of this paper:
Howi3, Peter. "Business Cycles with Costly Search and Recruiting." Department of Economics Research Reports, 8417. London, ON:
Department of Economics, University of Western Ontario (1984).
Citations
More filters
Book

Equilibrium Unemployment Theory

Christopher Pissarides
TL;DR: In this article, the model of balanced growth is used to model the labour market and balance-growth adjustment dynamics, and search intensity and job advertising are modeled as ananlysis of the labor market.
Posted Content

Business Cycles and Labor-Market Search

David Andolfatto
- 01 Jan 1996 - 
TL;DR: In this article, the authors evaluated the impact of labor market search for economic fluctuations in the context of a real business cycle model and found that incorporating labor-market search into the model improved its empirical performance along several dimensions.
Journal ArticleDOI

Search-Theoretic Models of the Labor Market: A Survey

Richard Rogerson, +2 more
- 01 Nov 2005 - 
TL;DR: The authors survey the literature on search-theoretic models of the labor market and show how this approach addresses many issues, including: Why workers sometimes choose to remain unemployed, what determines the lengths of employment and unemployment spells, how can there simultaneously exist unemployed workers and unfilled vacancies, how aggregate unemployment and vacancies, homogeneous workers earn different wages, what are the tradeoffs firms face from different wages and how do wages and turnover interact? What determines efficient turnover.
Posted Content

Job Reallocation, Employment Fluctuations and Unemployment

Dale T. Mortensen, +1 more
- 01 Apr 1999 - 
TL;DR: In this article, the authors present a model for the flow of new jobs and unemployed workers from inactivity to production (the "job creation" flow) and a flow of workers from employment to unemployment and of jobs out of the market (the 'job destruction' flow).

American Economic Association

G Judge, +1 more
References
More filters
Journal ArticleDOI

The General Theory of Employment

John Maynard Keynes
- 01 Feb 1937 - 
TL;DR: In this paper, the theory of interest was restated and the output of capital goods and of consumption was analyzed in terms of uncertainty and fluctuations of investment, and demand and supply for output as a whole.
Journal ArticleDOI

Aggregate Demand Management in Search Equilibrium

Peter A. Diamond
- 01 Oct 1982 - 
TL;DR: In this article, a simple barter model with identical risk-neutral agents where trade is coordinated by a stochastic matching process is analyzed for a simple single-agent setting, and it is shown that there are multiple steady-state rational expectations equilibria, with all non-corner solution equilibrium inefficient.
Journal ArticleDOI

Sectoral Shifts and Cyclical Unemployment

David M. Lilien
- 01 Aug 1982 - 
TL;DR: In this article, the authors present evidence that most of the unemployment fluctuations of the seventies (unlike those in the sixties) were induced by unusual structural shifts within the U.S. economy.
Posted Content

Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?

Katharine G. Abraham, +3 more
- 01 Jul 1984 - 
TL;DR: In this paper, it was shown that aggregate demand movements alone can produce a positive correlation between employment growth rates across sectors and the unemployment rate and that shifts in demand from some sectors to others are responsible for a substantial fraction of cyclical variation in unemployment.
Book

Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?

Katharine G. Abraham, +1 more
TL;DR: This paper showed that traditional single-factor business cycle models will produce a positive correlation between the dispersion of employment growth rates across sectors and the unemployment rate, implying that sectoral shifts in labor demand are responsible for a substantial fraction of cyclical variation in unemployment.
Related Papers (5)

Aggregate Demand Management in Search Equilibrium

Peter A. Diamond
- 01 Oct 1982 - 

On The Efficiency of Matching and Related Models of Search and Unemployment

Arthur J. Hosios
- 01 Apr 1990 - 

Job Creation and Job Destruction in the Theory of Unemployment

Dale T. Mortensen, +1 more
- 01 Jul 1994 - 

Efficiency Wage Models of the Labor Market: Equilibrium Unemployment as a Worker Discipline Device

Carl Shapiro, +1 more
- 01 Oct 1986 - 

Equilibrium Unemployment Theory

Christopher Pissarides