Learning on the Job and the Cost of Business Cycles

• 成果类型: Article
• 署名作者: Walentin, Karl; Westermark, Andreas
• 署名单位: Uppsala University; Sveriges Riksbank
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20180473
• 发表日期: 2022
• 页码: 341-377
• 关键词: equilibrium unemployment; cyclical behavior; mobility; fluctuations; volatility; SEPARATION; accuracy; earnings; skill

摘要

We show that business cycles reduce welfare through a decrease in the average level of employment in a labor market search model with learning on the job and skill loss during unemployment. Empirically, unemployment and the job-finding rate are negatively correlated. Since new jobs are the product of these two from the employment transition equation, business cycles imply fewer new jobs. Learning on the job implies that the resulting decrease in employment reduces aggregate human capital. This reduces incen-tives to post vacancies, further decreasing employment and human capital. We quantify this mechanism and find large output and wel-fare costs of business cycles.