Structural change and wage formation in an empirical flow model for the labour market

Research output: Working paperProfessional

Abstract

This paper analyzes the impact of supply shocks, demand shocks and policy shocks on labour market dynamics, using a consistent macroeconomic flow model of the Dutch labour market. The long run properties of the model mimic those of the theoretical equilibrium search models, with endogenous vacancy supply, wage formation and matching of unemployed and vacancies. The model also describes the propagation of shocks through different duration classes of unemployment and allows for duration dependent exit probabilities from unemployment. Simulation experiments and a sensitivity analysis show that a shock may bring the labour market out of its long run dynamic equilibrium for a considerable period and that the length of that period depends much on the initial pace of structural change.
Original languageEnglish
Place of PublicationAmsterdam
PublisherFaculty of Economics and Business Administration, Vrije Universiteit Amsterdam
Publication statusPublished - 1995

Publication series

NameResearch Memorandum
No.1995-39

Fingerprint

Labour market
Wage formation
Structural change
Vacancy
Unemployment
Demand shocks
Sensitivity analysis
Supply shocks
Labor market dynamics
Dynamic equilibrium
Simulation experiment
Macroeconomics
Exit
Propagation

Cite this

Gautier, P. A., & den Butter, F. A. G. (1995). Structural change and wage formation in an empirical flow model for the labour market. (Research Memorandum; No. 1995-39). Amsterdam: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam.
Gautier, P.A. ; den Butter, F.A.G. / Structural change and wage formation in an empirical flow model for the labour market. Amsterdam : Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, 1995. (Research Memorandum; 1995-39).
@techreport{22591264b5d54d978b8fb99eff70e67a,
title = "Structural change and wage formation in an empirical flow model for the labour market",
abstract = "This paper analyzes the impact of supply shocks, demand shocks and policy shocks on labour market dynamics, using a consistent macroeconomic flow model of the Dutch labour market. The long run properties of the model mimic those of the theoretical equilibrium search models, with endogenous vacancy supply, wage formation and matching of unemployed and vacancies. The model also describes the propagation of shocks through different duration classes of unemployment and allows for duration dependent exit probabilities from unemployment. Simulation experiments and a sensitivity analysis show that a shock may bring the labour market out of its long run dynamic equilibrium for a considerable period and that the length of that period depends much on the initial pace of structural change.",
author = "P.A. Gautier and {den Butter}, F.A.G.",
year = "1995",
language = "English",
series = "Research Memorandum",
publisher = "Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam",
number = "1995-39",
type = "WorkingPaper",
institution = "Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam",

}

Gautier, PA & den Butter, FAG 1995 'Structural change and wage formation in an empirical flow model for the labour market' Research Memorandum, no. 1995-39, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, Amsterdam.

Structural change and wage formation in an empirical flow model for the labour market. / Gautier, P.A.; den Butter, F.A.G.

Amsterdam : Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, 1995. (Research Memorandum; No. 1995-39).

Research output: Working paperProfessional

TY - UNPB

T1 - Structural change and wage formation in an empirical flow model for the labour market

AU - Gautier, P.A.

AU - den Butter, F.A.G.

PY - 1995

Y1 - 1995

N2 - This paper analyzes the impact of supply shocks, demand shocks and policy shocks on labour market dynamics, using a consistent macroeconomic flow model of the Dutch labour market. The long run properties of the model mimic those of the theoretical equilibrium search models, with endogenous vacancy supply, wage formation and matching of unemployed and vacancies. The model also describes the propagation of shocks through different duration classes of unemployment and allows for duration dependent exit probabilities from unemployment. Simulation experiments and a sensitivity analysis show that a shock may bring the labour market out of its long run dynamic equilibrium for a considerable period and that the length of that period depends much on the initial pace of structural change.

AB - This paper analyzes the impact of supply shocks, demand shocks and policy shocks on labour market dynamics, using a consistent macroeconomic flow model of the Dutch labour market. The long run properties of the model mimic those of the theoretical equilibrium search models, with endogenous vacancy supply, wage formation and matching of unemployed and vacancies. The model also describes the propagation of shocks through different duration classes of unemployment and allows for duration dependent exit probabilities from unemployment. Simulation experiments and a sensitivity analysis show that a shock may bring the labour market out of its long run dynamic equilibrium for a considerable period and that the length of that period depends much on the initial pace of structural change.

M3 - Working paper

T3 - Research Memorandum

BT - Structural change and wage formation in an empirical flow model for the labour market

PB - Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam

CY - Amsterdam

ER -

Gautier PA, den Butter FAG. Structural change and wage formation in an empirical flow model for the labour market. Amsterdam: Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam. 1995. (Research Memorandum; 1995-39).