| Title |
Date |
Publication |
Author(s) |
Type |
| Northeast Ohio Economics Workshop
|
November, 2009 |
|
Murat Tasci; |
Workshops |
| Abstract: This workshop provides economists in Northeast Ohio with an opportunity to present their research and fosters ties between area researchers who may have similar interests. The workshop is a great opportunity for junior faculty to network with one another and receive feedback on their research.
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| Diagnosing Labor Market Search Models: A Multiple-Shock Approach
|
December, 2008 |
Federal Reserve Bank of Cleveland, Working Paper no. 08-13 |
Murat Tasci; Kenneth Beauchemin; |
Working Papers |
| Abstract: We construct a multiple-shock version of the Mortensen-Pissarides labor market search model to investigate the basic model’s well-known tendency to underpredict the volatility of key labor market variables. Data on U.S. job-finding and job separation probabilities are used to help estimate the parameters of a three-dimensional shock process comprising labor productivity, job separation, and matching or “allocative” effciency. Although our multiple-shock model generates some more volatility, it has counterfactual implications for the cyclicality of unemployment and vacancies. Our second exercise forces the model to be the data-generating process to uncover the necessary realizations of all three shocks. We show that the Mortensen-Pissarides labor market search model requires significantly procyclical and volatile matching efficiency and job separations to simultaneously account for high procyclical variations in job-finding probabilities as well as relatively small net employment changes in the data. Hence, the model is more fundamentally flawed than its inability to amplify shocks would suggest. We also show that variation in job separations accounts for most of the employment fluctuations, suggesting that endogenous separations could be the key feature of an improved model. This leads us to conclude that the model lacks mechanisms to generate procyclical matching efficiency and labor force reallocation. As for the latter, we conjecture that nontrivial labor force participation and job-to-job transitions are promising avenues of research.
Note: This paper is a revised version of an earlier working paper of the same title, WP 07-20.
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| Positive and Normative Effects of a Minimum Wage
|
January, 2008 |
Federal Reserve Bank of Cleveland, Working Paper no. 0801 |
Murat Tasci; Guillaume Rocheteau; |
Working Papers |
| Abstract: We review the positive and normative effects of a minimum wage in various versions of a search-theoretic model of the labor market.
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| On-the-Job Search and Labor Market Reallocation
|
December, 2007 |
Federal Reserve Bank of Cleveland, Working Paper no. 0725 |
Murat Tasci; |
Working Papers |
| Abstract: This paper studies amplification of productivity shocks in labor markets through on-the-job-search. There is incomplete information about the quality of the employee-firm match which provides persistence in employment relationships and the rationale for on-the-job search. Amplification arises because productivity changes not only affect firms? probability of contacting unemployed workers but also of contacting already employed workers. Since higher productivity raises the value of all matches, even low quality matches become productive enough to survive in expansions. Therefore the measure of workers in low quality matches is greater when productivity is high, implying a higher probability of switching to another match. In other words, firms are more likely to meet employed workers in expansions and those they meet are more likely to accept a firm?s job offer because they are more likely to be employed in a low quality match. This introduces strongly procyclical labor market reallocation through procyclical job-to-job transitions. Simulations with a productivity process that is consistent with average labor productivity in the U.S. show that standard deviations for unemployment, vacancies and market tightness (vacancy-unemployment ratio) match the U.S. data. The model also reconciles the presence of endogenous separation with the negative correlation of unemployment and vacancies over business cycle frequencies (i.e. it is consistent with the Beveridge curve).
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| Diagnosing Labor Market Search Models: A Multiple-Shock Approach
|
December, 2007 |
Federal Reserve Bank of Cleveland, Working Paper no. 0720 |
Murat Tasci; Kenneth Beauchemin; |
Working Papers |
| Abstract: This paper constructs a multiple-shock version of the Mortensen-Pissarides labor market search model to investigate the basic model’s well-known tendency to under predict the volatility of key labor market variables. Data on U.S. job finding and job separation probabilities are used to help estimate the parameters of a three-dimensional shock process comprising labor productivity, job separation, and matching or “allocative” efficiency. The authors show that the Mortensen-Pissarides labor market search model requires significantly procyclical and volatile job separations to simultaneously account for high procyclical variations in jobfinding probabilities as well as relatively small net employment changes. Hence, the model is more fundamentally flawed than its inability to amplify shocks would suggest. This leads the authors to conclude that the model lacks mechanisms to generate procyclical matching efficiency and labor force reallocation. As for the latter, the authors conjecture that nontrivial labor force participation and job-to-job transitions are promising avenues of research. NOTE: This paper has been revised and reposted as WP08-13.
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| Coordination Failures in the Labor Market
|
November, 2007 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Murat Tasci; Guillaume Rocheteau; |
Economic Commentary |
| Abstract: Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.
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| The Minimum Wage and the Labor Market
|
May, 2007 |
Federal Reserve Bank of Cleveland, Economic Commentary |
Murat Tasci; Guillaume Rocheteau; |
Economic Commentary |
| Abstract: New models of employment show that there are some cases in which a minimum wage can have positive effects on employment and social welfare. The effects depend ultimately on the prevailing market wage and the frictions in the market. Evidence to date does not support the view that raising the minimum wage will lead to positive employment effects.
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