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Federal Reserve Bank of Dallas
Working Papers
Labor matching: putting the pieces together
Anton A. Cheremukhin
Abstract

The original Mortensen-Pissarides model possesses two elements that are absent from the commonly used simplified version: the job destruction margin and training costs. I find that these two elements enable a model driven by a single aggregate shock to simultaneously explain most movements involving unemployment, vacancies, job destruction, job creation, the job finding rate and wages. The job destruction margin's role in propagating aggregate shocks is to create an additional pool of unemployed at the onset of a recession. The role of training costs is to explain the simultaneous decline in vacancies and slow response of job creation.


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Anton A. Cheremukhin, Labor matching: putting the pieces together, Federal Reserve Bank of Dallas, Working Papers 1102, 2011.
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Keywords: Unemployment ; Job creation ; Employment ; Business cycles
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