Assignment on Impact of Unemployment in US Economy

Job Loss, Job Finding, and Unemployment in the U.S.

Economy over the Past litre Years ¤KRISHNA YADAVIILM INSTITUTE FOR HIGHER EDUCATION, GURGAON, HARYANAASSIGNMENT ON IMPACT OF UNEMPLOYEMENT IN THE US ECONOMY.

September 15, 2005AbstractNew data compel a bleak view of events in the labor market during a recession.

Unemployment rises approximately entirely because jobs become harder to find. Recessionsinvolve little increase in the course of workers out of jobs. Another important findingfrom new data is that a large fraction of workers departing jobs move to new jobs withoutintervening unemployment. I receive estimates of separation invests and job-findingrates for the past 50 years, using historic data informed by detailed recent data. Theseparation rate is nearly constant while the job-finding rate shows high volatility atbusiness-cycle and lower frequencies. I review modern-day theories of fluctuations in thejob-finding rate. The repugn to these theories is to identify mechanisms in the labormarket that amplify small changes in campaign forces into fluctuations in the job-findingrate of the high magnitude actually observed. In the old-hat theory developed overthe past two decades, the wage moves to counterweight driving forces and the predicted magnitudeof changes in the job-finding rate is tiny. New models overcome this piazza byinvoking a new form of sticky wages or by introducing information and other frictionsinto the employment relationship.

¤Presented to the NBER Macro yearly Conference, April 2005. This research is part of the program onEconomic Fluctuations and Growth of the NBER. I thank the editors and discussants, Narayana Kocherlakota,Michael Krause, Thomas Lubik, Robert Shimer, and Frank Wolak for comments, suggestions, and data. Afile containing data and programs is available at Stanford.edu/?rehall11 IntroductionThe overturn view of unemployment has a firm grip on modern thinking about joblessnessin the United States. Unemployment occurs when a worker departs from a job and spendstime finding a new job. In...

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