Working Paper

They Are Even Larger! More (on) Puzzling Labor Market Volatilities

Kiel Working Papers, 1545

This paper shows that the German labor market is more volatile than the US labor market. Specifically, the volatility of the cyclical component of several labor market variables (e.g., the job-finding rate, labor market tightness, and job vacancies) divided by the volatility of labor productivity is roughly twice as large as in the United States. We derive and simulate a simple dynamic labor market model with heterogeneous worker productivity. This model is able to explain the higher German labor market volatilities by a longer expected job duration.

Authors

Hermann Gartner
Christian Merkl
Thomas Rothe

Info

Publication Date
JEL Classification
J6, E24, E32