Specific Capital and Vintage Effects on the Dynamics of Unemployment and Vacancies
American Economic Review
vol. 100,
no. 3, June 2010
(pp. 1214-37)
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.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.100.3.1214Additional Materials
JEL Classification
- 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