Working Paper
Labor market search in emerging economies
Abstract: This paper shows that labor markets of emerging economies are characterized by large fluctuations in wages while employment fluctuations are subdued. We find that a real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions can account for these aforementioned regularities. Moreover, the joint interaction of countercyclical interest rates and search-matching frictions can go a long way in accounting for higher consumption variability relative to output and countercyclical current account observed in emerging markets. Extending this baseline model to incorporate procyclical variations in the technical efficiency at which matches are generated, the model can match the unemployment variability observed in the data.
Keywords: Labor market; Business cycles;
Access Documents
File(s): File format is text/html http://www.federalreserve.gov/pubs/ifdp/2009/989/default.htm
File(s): File format is application/pdf http://www.federalreserve.gov/pubs/ifdp/2009/989/ifdp989.pdf
Authors
Bibliographic Information
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: International Finance Discussion Papers
Publication Date: 2009
Number: 989