Uncertainty and unemployment

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• dc.contributor.author Schaal, Edouard
• dc.date.accessioned 2021-09-30T09:28:09Z
• dc.date.available 2021-09-30T09:28:09Z
• dc.date.issued 2017
• dc.description.abstract This paper studies the impact of time-varying idiosyncratic risk at the establishmentlevel on unemployment fluctuations over 1972–2009. I build a tractable directed searchmodel with firm dynamics and time-varying idiosyncratic volatility. The model allowsfor endogenous separations, entry and exit, and job-to-job transitions. I show that themodel can replicate salient features of the microeconomic behavior of firms and thatthe introduction of volatility improves the fit of the model for standard business cyclemoments. In a series of counterfactual experiments, I show that time-varying risk isimportant to account for the magnitude of fluctuations in aggregate unemployment forpast U.S. recessions. Though the model can account for about 40% of the total increasein unemployment for the 2007–2009 recession, uncertainty alone is not sufficient toexplain the magnitude and persistence of unemployment during that episode.
• dc.description.sponsorship Financial support from the Spanish Ministry of Economy and Competitiveness, throughthe Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563).
• dc.format.mimetype application/pdf
• dc.identifier.citation Schaal E. Uncertainty and unemployment. Econometrica. 2017 Nov;85(6):1675-721. DOI: 10.3982/ECTA10557
• dc.identifier.doi http://dx.doi.org/10.3982/ECTA10557
• dc.identifier.issn 0012-9682
• dc.identifier.uri http://hdl.handle.net/10230/48536
• dc.language.iso eng
• dc.publisher Econometric Society
• dc.relation.ispartof Econometrica. 2017 Nov;85(6):1675-721
• dc.relation.projectID info:eu-repo/grantAgreement/ES/1PE/SEV2015-0563
• dc.rights © The Econometric Society 2017. The copyright to this article is held by the Econometric Society, http://www.econometricsociety.org/. It may be downloaded, printed and reproduced only for personal or classroom use. Absolutely no downloading or copying may be done for, or on behalf of, any for-profit commercial firm or for other commercial purpose without the explicit permission of the Econometric Society. For this purpose, contact the Editorial Office of the Econometric Society at econometrica@econometricsociety.org.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.subject.keyword Uncertainty
• dc.subject.keyword Volatility
• dc.subject.keyword Search-and-matching
• dc.subject.keyword Business cycles
• dc.title Uncertainty and unemployment
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion