Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Chicago
Economic Perspectives
Evaluating the role of labor market mismatch in rising unemployment
Gadi Barlevy
Abstract

Recent labor market trends have raised concerns that the unemployment rate is high not because employers are reluctant to hire but because they are unable to hire. These concerns, if true, would cast doubt on using monetary policy to stimulate the labor market, since it works by encouraging firms to hire more. Using a matching function approach, the author finds that a shock that makes it more difficult for firms to hire qualified applicants would by itself imply an unemployment rate of no more than 7.1 percent, much below the actual unemployment rate during the past two years. Hence, the recent patterns in unemployment and vacancy data do not necessarily rule out a role for monetary policy.


Download Full text
Cite this item
Gadi Barlevy, "Evaluating the role of labor market mismatch in rising unemployment" , Federal Reserve Bank of Chicago, Economic Perspectives, issue Q III, pages 82-96, 2011.
More from this series
JEL Classification:
Subject headings:
Keywords: Labor market ; Unemployment
For corrections, contact Bernie Flores ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal