Walentin, Karl
Learning on the job and the cost of business cycles / by Karl Walentin and Andreas Westermark
Resumen
Bibliografía
We show that business cycles reduce welfare through a decrease in the average level of employment in a labor market search model with learning on the job and skill loss during unemployment. Empirically, unemployment and the job-finding rate are negatively correlated. Since new jobs are the product of these two from the employment transition equation, business cycles imply fewer new jobs. Learning on the job implies that the resulting decrease in employment reduces aggregate human capital. This reduces incentives to post vacancies, further decreasing employment and human capital. We quantify this mechanism and find large output and welfare costs of business cycles.
CICLOS ECONOMICOS
MERCADO DE TRABAJO
DESEMPLEO
CAPITAL HUMANO
BIENESTAR SOCIAL
ESTADOS UNIDOS
Westermark, Andreas
American Economic Journal : Macroeconomics 1945-7707 v. 14, n. 4, October 2022, p. 341-377
Learning on the job and the cost of business cycles / by Karl Walentin and Andreas Westermark
Resumen
Bibliografía
We show that business cycles reduce welfare through a decrease in the average level of employment in a labor market search model with learning on the job and skill loss during unemployment. Empirically, unemployment and the job-finding rate are negatively correlated. Since new jobs are the product of these two from the employment transition equation, business cycles imply fewer new jobs. Learning on the job implies that the resulting decrease in employment reduces aggregate human capital. This reduces incentives to post vacancies, further decreasing employment and human capital. We quantify this mechanism and find large output and welfare costs of business cycles.
CICLOS ECONOMICOS
MERCADO DE TRABAJO
DESEMPLEO
CAPITAL HUMANO
BIENESTAR SOCIAL
ESTADOS UNIDOS
Westermark, Andreas
American Economic Journal : Macroeconomics 1945-7707 v. 14, n. 4, October 2022, p. 341-377