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On the Dynamics of Unemployment and Wage Distributions

2011; Wiley; Volume: 79; Issue: 5 Linguagem: Inglês

10.3982/ecta9070

1468-0262

Jean‐Marc Robin,

Economic Policies and Impacts

EconometricaVolume 79, Issue 5 p. 1327-1355 On the Dynamics of Unemployment and Wage Distributions Jean-Marc Robin, Jean-Marc Robin Dept. of Economics, Sciences Po, 28 rue des St. Pères, 75007 Paris, France and University College London; [email protected] This article is based on my Walras–Bowley Lecture, presented at the North American Summer Meetings of the Econometric Society, Boston University, June 2009. Helpful comments were received from participants in seminars at IFS, Stockholm University, Sciences Po, CREST-INSEE, Cambridge University, the Paris School of Economics, and conferences at the Milton Friedman Institute (University of Chicago), Jerusalem (Bank of Israel), and Venice (CSEifo). I am particularly grateful to Rob Shimer, Iouri Manovskii, Jean-Olivier Hairault, Thomas Piketty, Pierre Cahuc, Francis Kramarz, Guy Laroque, Boyan Jovanovic, Tom Sargent, and Fabien Postel-Vinay whose questions and comments have definitely influenced this paper.Search for more papers by this author Jean-Marc Robin, Jean-Marc Robin Dept. of Economics, Sciences Po, 28 rue des St. Pères, 75007 Paris, France and University College London; [email protected] This article is based on my Walras–Bowley Lecture, presented at the North American Summer Meetings of the Econometric Society, Boston University, June 2009. Helpful comments were received from participants in seminars at IFS, Stockholm University, Sciences Po, CREST-INSEE, Cambridge University, the Paris School of Economics, and conferences at the Milton Friedman Institute (University of Chicago), Jerusalem (Bank of Israel), and Venice (CSEifo). I am particularly grateful to Rob Shimer, Iouri Manovskii, Jean-Olivier Hairault, Thomas Piketty, Pierre Cahuc, Francis Kramarz, Guy Laroque, Boyan Jovanovic, Tom Sargent, and Fabien Postel-Vinay whose questions and comments have definitely influenced this paper.Search for more papers by this author First published: 20 September 2011 https://doi.org/10.3982/ECTA9070Citations: 44 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract Postel-Vinay and Robin's (2002) sequential auction model is extended to allow for aggregate productivity shocks. Workers exhibit permanent differences in ability while firms are identical. Negative aggregate productivity shocks induce job destruction by driving the surplus of matches with low ability workers to negative values. Endogenous job destruction coupled with worker heterogeneity thus provides a mechanism for amplifying productivity shocks that offers an original solution to the unemployment volatility puzzle (Shimer (2005)). Moreover, positive or negative shocks may lead employers and employees to renegotiate low wages up and high wages down when agents' individual surpluses become negative. The model delivers rich business cycle dynamics of wage distributions and explains why both low wages and high wages are more procyclical than wages in the middle of the distribution. Citing Literature Volume79, Issue5September 2011Pages 1327-1355 RelatedInformation