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American Economic Review: Vol. 100 No. 3 (June 2010)

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Specific Capital and Vintage Effects on the Dynamics of Unemployment and Vacancies

Article Citation

Eyigungor, Burcu. 2010. "Specific Capital and Vintage Effects on the Dynamics of Unemployment and Vacancies." American Economic Review, 100(3): 1214-37.

DOI: 10.1257/aer.100.3.1214

Abstract

In a reasonably calibrated Mortensen and Pissarides matching model, shocks to average labor productivity can account for a small portion of the fluctuations in unemployment and vacancies (Shimer (2005)). I add heterogeneity in jobs (matches) with respect to the time the job is created in the form of different embodied technology levels. I also introduce specific capital that, once adapted for a match, has less value in another match. I show that the augmented model can account for fluctuations in unemployment and vacancies, and that specific capital is important to decreasing the volatility of the destruction rate of existing matches.

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Authors

Eyigungor, Burcu (Koc U)

JEL Classifications

E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
E32: Business Fluctuations; Cycles
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J41: Labor Contracts
J63: Labor Turnover; Vacancies; Layoffs
J64: Unemployment: Models, Duration, Incidence, and Job Search


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