scholarly journals The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?

Econometrica ◽  
2009 ◽  
Vol 77 (5) ◽  
pp. 1339-1369 ◽  
Keyword(s):  
Wage Stickiness ◽  
Volatility Puzzle ◽  
Unemployment Volatility

scholarly journals The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?

2011 ◽  
pp. 65-88 ◽  
Author(s):  
Ch. Pissarides
Keyword(s):  
Nobel Prize ◽  
Job Creation ◽  
Nobel Prize Winner ◽  
Search And Matching ◽  
Wage Stickiness ◽  
Search And Matching Model ◽  
Volatility Puzzle ◽  
Unemployment Volatility ◽  
Job Finding ◽  
Cyclical Volatility

The author discusses the failure of the canonical search and matching model to explain the cyclical volatility in the job finding rate. The author - the Nobel Prize winner in economics in 2010 - shows that job creation in the model is influenced by wages in new matches. He summarizes microeconometric evidence and finds that wages in new matches are volatile and consistent with the models key predictions. Therefore, explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages. The author discusses a modification of the model, based on fixed matching costs, that can increase cyclical unemployment volatility and is consistent with wage flexibility in new matches.

scholarly journals A NOTE ON THE UNEMPLOYMENT VOLATILITY PUZZLE: IS CREDIBLE WAGE BARGAINING THE ANSWER?

2020 ◽  
pp. 1-13
Author(s):  
Bingsong Wang
Keyword(s):  
Wage Bargaining ◽  
Bargaining Model ◽  
Wage Flexibility ◽  
Unrealistic Assumption ◽  
Volatility Puzzle ◽  
Unemployment Volatility

This paper shows that the ability of the credible wage bargaining model to match the observed unemployment volatility hinges on an unrealistic assumption about disagreement payoffs to the firm. Relaxing this assumption can lead to the substantial wage flexibility. As a consequence, the model is unable to capture the observed unemployment volatility.

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