Equilibrium in the Labour Market with Search Frictions Christopher - - PowerPoint PPT Presentation

▶

Apr 29, 2023 385 likes •531 views

Equilibrium in the Labour Market with Search Frictions Christopher A Pissarides London School of Economics Nobel Lecture, 8 December 2010 Theory How I got into search theory Searching for what? Search for a high wage Two-sided

SLIDE 1

Equilibrium in the Labour Market with Search Frictions

Christopher A Pissarides London School of Economics Nobel Lecture, 8 December 2010

SLIDE 2

Theory

 How I got into search theory  Searching for what?

 Search for a high wage  Two-sided search for a good match  The matching function

SLIDE 3

Theory

 Towards an equilibrium model  Wage bargains  Job creation  Beveridge curve equilibrium

SLIDE 4

vacancies unemployment

Job creation Beveridge curve

The Beveridge curve and equilibrium vacancies and unemployment

SLIDE 5

Application 1

Comparing economies

ver space and time

SLIDE 6

Comparing economies

vacancies unemployment

Job creation lines Beveridge curves

Economy with more frictions v u Economy with lower level of aggregate activity

SLIDE 7

Figure 4 The British Beveridge curve, 1975-1984 (an economy with more frictions)

84 83 82 81 80 79 78 77 76 75 0.00 0.20 0.40 0.60 0.80 1.00 1.20 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 unemployment % vacancies %

SLIDE 8

Figure 5 The British Beveridge curve, 2008-2010 (an economy with lower level of aggregate activity)

1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5

unemployment vacancies

2008M1 2009M4 2010M

SLIDE 9

Figure 6 The US Beveridge Curve, 1975-1984 (an economy driven by aggregate economic activity)

84 83 82 81 80 79 78 77 76 75 1.5 2 2.5 3 3.5 4 4.5 5 5.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 10 10.5 unemployment vacancies

SLIDE 10

Figure 7 The US Beveridge curve, 2008-2010 (an economy with lower level of aggregate activity, followed by jobless recovery with frictions?)

1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 3.1 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 unemployment vacancies

2008M1 2009M4

2010M10

SLIDE 11

More applications

 Wage stickiness  Job destruction  Employment protection legislation

SLIDE 12

Figure 9 Job creation and job destruction rates, US non-farm sector

0.0 5.0 10.0 15.0 20.0 25.0 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 per cent of employment (annual) JCR JDR

SLIDE 13

Where do we go next?

 Role of institutions  Theory of wages: how much wage stickiness and why?  Imperfect capital markets  Imperfect knowledge and expectations  Integration of financial and labour markets