Search in Macroeconomic Models of the Labor Market

Richard Rogerson, Robert Shimer

Research output: Contribution to journalArticlepeer-review

90 Scopus citations

Abstract

This chapter assesses how models with search frictions have shaped our understanding of aggregate labor market outcomes in two contexts: business cycle fluctuations and long-run (trend) changes. We first consolidate data on aggregate labor market outcomes for a large set of OECD countries. We then ask how models with search improve our understanding of these data. Our results are mixed. Search models are useful for interpreting the behavior of some additional data series, but search frictions per se do not seem to improve our understanding of movements in total hours at either business cycle frequencies or in the long-run. Still, models with search seem promising as a framework for understanding how different wage setting processes affect aggregate labor market outcomes.

Original languageEnglish (US)
Pages (from-to)619-700
Number of pages82
JournalHandbook of Labor Economics
Volume4
Issue numberPART A
DOIs
StatePublished - 2011
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Organizational Behavior and Human Resource Management

Keywords

  • Business cycle
  • Cross-country comparisons
  • Search
  • Unemployment
  • Wages
  • Worker flows

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