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Labor-market Volatility in Matching Models with Endogenous Separations
2007
The Scandinavian Journal of Economics
The business-cycle behavior of a matching model with endogenous separations is studied in this paper. We show that whether aggregate productivity shocks have a larger effect on the vacancy-unemployment ratio than in a model with exogenous separations depends on whether worker productivity stochastically increases with tenure. The difference in the response is quantitatively small, however. We also show that the cleansing effect introduced by allowing for endogenous separations can help in
doi:10.1111/j.1467-9442.2007.00515.x
fatcat:iyb655r6yrclzaduodgh66lidy