scholarly journals Rational Inattention in Hiring Decisions

2020 ◽  
Vol 12 (1) ◽  
pp. 1-40 ◽  
Author(s):  
Sushant Acharya ◽  
Shu Lin Wee
Keyword(s):  
Great Recession ◽  
Sufficient Information ◽  
Limited Capacity ◽  
Hiring Decisions ◽  
Rational Inattention ◽  
Unemployment Rates ◽  
The Great Recession ◽  
Matching Efficiency ◽  
Acceptance Rates ◽  
Joint Behavior

We provide an information-based theory of matching efficiency fluctuations. Rationally inattentive firms have limited capacity to process information and cannot perfectly identify suitable applicants. During recessions, higher losses from hiring unsuitable workers cause firms to be more selective in hiring. When firms cannot obtain sufficient information about applicants, they err on the side of caution and accept fewer applicants to minimize losses from hiring unsuitable workers. Pro-cyclical acceptance rates drive a wedge between meeting and hiring rates, explaining fluctuations in matching efficiency. Quantitatively, our model replicates the joint behavior of unemployment rates and matching efficiency observed since the Great Recession. (JEL D83, E24, E32, J23, J41, M51)

Aggregate Recruiting Intensity

2018 ◽  
Vol 108 (8) ◽  
pp. 2088-2127 ◽  
Author(s):  
Alessandro Gavazza ◽  
Simon Mongey ◽  
Giovanni L. Violante
Keyword(s):  
Labor Market ◽  
Great Recession ◽  
Equilibrium Model ◽  
Random Search ◽  
Firm Dynamics ◽  
Hiring Decisions ◽  
Aggregate Shocks ◽  
Fast Growing ◽  
The Great Recession ◽  
Matching Efficiency

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economy-wide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable procyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness. (JEL D22, E24, E32, J23, J41, J63, M51)

scholarly journals The State of States’ Unemployment in the Fourth District

2017 ◽  
pp. 1-4
Author(s):  
Murat Tasci ◽  
Caitlin Treanor
Keyword(s):  
Labor Market ◽  
Unemployment Rate ◽  
Normal Level ◽  
Great Recession ◽  
State Level ◽  
The State ◽  
Us States ◽  
Unemployment Rates ◽  
The Great Recession ◽  
Business Cycle Fluctuations

Unemployment rates vary across individual US states at any point in time and respond to business-cycle fluctuations differently. Evaluating what constitutes a "normal" level for the unemployment rate at the state level is not easy, but it is an important issue for policymakers. We introduce a framework that enables us to calculate the normal unemployment rate for each of the four states in the Fourth District and compare that rate to the national normal rate. We conclude that these states and the District as a whole have very little labor market slack left from the Great Recession.

scholarly journals Understanding the Great Recession

2015 ◽  
Vol 7 (1) ◽  
pp. 110-167 ◽  
Author(s):  
Lawrence J. Christiano ◽  
Martin S. Eichenbaum ◽  
Mathias Trabandt
Keyword(s):  
Great Recession ◽  
Economic Activity ◽  
New Keynesian ◽  
Factor Productivity ◽  
Working Capital ◽  
The Great Recession ◽  
Keynesian Model ◽  
Price Rigidities ◽  
The Cost ◽  
Joint Behavior

We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession. (JEL E12, E23, E24, E31, E32, E52)

scholarly journals From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy

2014 ◽  
Vol 28 (1) ◽  
pp. 167-188 ◽  
Author(s):  
Christian Dustmann ◽  
Bernd Fitzenberger ◽  
Uta Schönberg ◽  
Alexandra Spitz-Oener
Keyword(s):  
Labor Market ◽  
Great Recession ◽  
Governance Structure ◽  
The United States ◽  
Labor Market Institutions ◽  
Sharp Decline ◽  
Market Institutions ◽  
Unemployment Rates ◽  
The Great Recession ◽  
Time Record

In the late 1990s and into the early 2000s, Germany was often called “the sick man of Europe.” Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005. Today, after the Great Recession, Germany is described as an “economic superstar.” In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009. Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment. How did Germany, with the fourth-largest GDP in the world transform itself from “the sick man of Europe” to an “economic superstar” in less than a decade? We present evidence that the specific governance structure of the German labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances, and that this distinctive characteristic of its labor market institutions has been the main reason for Germany's economic success over the last decade.

scholarly journals The Economic Impact of the Great Recession on Aboriginal People Living off Reserve in Canada

2015 ◽  
Vol 70 (3) ◽  
pp. 457-485 ◽  
Author(s):  
Danielle Lamb
Keyword(s):  
Great Recession ◽  
Aboriginal People ◽  
Labour Force ◽  
Aboriginal Peoples ◽  
Differential Impact ◽  
Entire Sample ◽  
Unemployment Rates ◽  
The Great Recession ◽  
Discouraged Workers ◽  
The Difference

Summary The present analysis seeks to examine whether the 2008 recession had a differential impact on Aboriginal as compared to non-Aboriginal Canadians as measured by the differences in the probability of unemployment between the two groups. Specifically, the present study tests two hypotheses: 1- Aboriginal people have been disproportionately burdened by the Great Recession as compared to non-Aboriginal people, and as a consequence; 2- Aboriginal people are more likely than non-Aboriginal people to be discouraged workers. The study uses data obtained from the master files of the Canadian Labour Force Survey for the years 2007 to 2012 inclusive to estimate the probability that an individual is unemployed based on a set of observable characteristics for a sample of labour force participants. The methodology begins by estimating a pooled model across all years, which includes controls for Aboriginal identity. Secondly, individual models of the probability of unemployment are estimated for each year for Aboriginal and non-Aboriginal labour force participants. The difference in the probability of unemployment from pooled models estimated separately for Aboriginal and non-Aboriginal peoples are decomposed to reveal the proportion of the gap that is due to differences in observable characteristics between the two groups and the amount of the gap that is attributable to differential returns to those characteristics. To investigate the second hypothesis, the study estimates the probability that a respondent is a discouraged worker based on the entire sample of both economically active and inactive persons (i.e. labour force participants and well as those not in the labour force). The results of both the pooled and individual models of the probability of unemployment support the first hypothesis, that Aboriginal peoples were disproportionately burdened by the 2008 recession as seen in higher and more enduring probabilities of unemployment. By the 2012, estimated unemployment rates had roughly returned to their pre-recessionary levels for Aboriginal and non-Aboriginal respondents with strongest labour force attachments. When individuals with weaker labour force attachments (i.e. those who have been unemployed for more than twelve months) are included in the analysis, the gap between the probability of unemployment for Aboriginal and non-Aboriginal persons widens. Furthermore, the second hypothesis, that Aboriginal people are more likely to be discouraged workers, was supported, as Aboriginal people were more likely to be discouraged workers in 2008-2010 and 2012.

scholarly journals Labor Market Heterogeneity and the Aggregate Matching Function

2015 ◽  
Vol 7 (4) ◽  
pp. 222-249 ◽  
Author(s):  
Regis Barnichon ◽  
Andrew Figura
Keyword(s):  
Labor Market ◽  
Great Recession ◽  
Matching Function ◽  
The Great Recession ◽  
Worker Heterogeneity ◽  
Dramatic Decline ◽  
Matching Efficiency ◽  
Labor Market Matching ◽  
The Unemployed ◽  
Regression Residual

We estimate an aggregate matching function and find that the regression residual, which captures movements in matching efficiency, displays procyclical fluctuations and a dramatic decline after 2007. Using a matching function framework that explicitly takes into account worker heterogeneity as well as market segmentation, we show that matching efficiency movements can be the result of variations in the degree of heterogeneity in the labor market. Matching efficiency declines substantially when, as in the Great Recession, the average characteristics of the unemployed deteriorate substantially, or when dispersion in labor market conditions—the extent to which some labor markets fare worse than others—increases markedly. (JEL E24, E32, J41, J42)

Die „Große Rezession“ und ihre Auswirkungen auf regionale Arbeitslosenquoten

2010 ◽  
Vol 54 (1) ◽  
Author(s):  
Christian Reiner
Keyword(s):  
Great Recession ◽  
Research Question ◽  
Multiple Linear Regression Model ◽  
Data Set ◽  
Spatial Error ◽  
Unemployment Rates ◽  
Regional Unemployment ◽  
The Great Recession ◽  
Percentage Point Increase ◽  
Section Data

Effects of the “Great Recession” on regional unemployment rates. The case of Germany, France and the United Kingdom. Contrary to the already encompassing literature on the differentiated effects of the “Great Recession” on states, this paper takes a regional economic perspective. To answer the research question which factors might explain the spatially unequal development of unemployment rates at the regional level, a cross-section data-set is used. Percentage point increase of regional unemployment rates between 2008 and 2009 is used as the dependent variable and a set of regional and national variables as independent variables; a multiple linear regression model is estimated. After detecting spatial autocorrelation for the OLS-estimators, the model is re-estimated and a spatial error model with ML-estimators is computed. It turns out that the share of low-skilled employees has a significant positive effect on the change of regional unemployment rates. Furthermore, financial centres showed a significantly better resilience than other regional economies. Because of the strong influence of national variables in these models, separate models are estimated for France and the UK. It is shown that the same variables have quite different effects. This questions the existence of a common explanation for regional unemployment dynamics in Europe.

scholarly journals Did the Great Recession affect mortality rates in the metropolitan United States? Effects on mortality by age, gender and cause of death

2020 ◽  
Author(s):  
Erin Strumpf ◽  
Thomas Charters ◽  
Sam Harper ◽  
Arijit Nandi
Keyword(s):  
Cardiovascular Disease ◽  
Metropolitan Area ◽  
Great Recession ◽  
Metropolitan Areas ◽  
Causal Effect ◽  
Mortality Rates ◽  
Unemployment Rates ◽  
The Great Recession ◽  
All Cause Mortality ◽  
Specific Mortality

Objectives: Mortality rates generally decline during economic recessions in high-income countries, however gaps remain in our understanding of the underlying mechanisms. This study estimates the impacts of increases in unemployment rates on both all-cause and cause-specific mortality across U.S. metropolitan regions during the Great Recession.Methods: We estimate the effects of economic conditions during the recent and severe recessionary period on mortality, including differences by age and gender subgroups, using fixed effects regression models. We identify a plausibly causal effect by isolating the impacts of within-metropolitan area changes in unemployment rates and controlling for common temporal trends. We aggregated vital statistics, population, and unemployment data at the area-month-year-age-gender-race level, yielding 527,040 observations across 366 metropolitan areas, 2005-2010.Results: We estimate that a one percentage point increase in the metropolitan area unemployment rate was associated with a decrease in all-cause mortality of 3.95 deaths per 100,000 person years (95%CI -6.80 to -1.10), or 0.5%. Estimated reductions in cardiovascular disease mortality contributed 60% of the overall effect and were more pronounced among women. Motor vehicle accident mortality declined with unemployment increases, especially for men and those under age 65, as did legal intervention and homicide mortality, particularly for men and adults ages 25-64. We find suggestive evidence that increases in metropolitan area unemployment increased accidental drug poisoning deaths for both men and women ages 25-64.Conclusions: Our finding that all-cause mortality increased during the Great Recession is consistent with previous studies. Some categories of cause-specific mortality, notably cardiovascular disease, also follow this pattern, and are more pronounced for certain gender and age groups. Our study also suggests that the recent recession contributed to the growth in deaths from overdoses of prescription drugs in working-age adults in metropolitan areas. Additional research investigating the mechanisms underlying the health consequences of macroeconomic conditions is warranted.

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