The aggregate effects of Labor Market Frictions

Michael Elsby; Ryan Michaels

The aggregate effects of Labor Market Frictions

School of Economics

Research output: Working paper

Abstract

Labor market frictions distort the path of aggregate employment by impeding the flow of labor across firms. For a canonical class of frictions, we show how observable measures of such flows can be used to assess the effect of frictions on aggregate employment dynamics. Application of this approach to establishment microdata for the United States reveals that the empirical flow of labor across firms deviates markedly from the predictions of canonical labor market frictions. Firm-size flows react sluggishly to aggregate shocks in the data, but are predicted to respond aggressively in theory. The paper therefore concludes that the propagation mechanism embodied in standard models of labor market frictions fails to account for the sources of observed employment dynamics.

Original language	English
Pages	1-50
Number of pages	50
Publication status	Published - 24 Dec 2016

Keywords / Materials (for Non-textual outputs)

labor market frictions
firm dynamics
adjustment costs

Access to Document

Elsby-Michaels-Ratner-Dec-2016Submitted manuscript, 861 KB

https://68088b26-a-62cb3a1a-s-sites.googlegroups.com/site/mikeelsby/Elsby-Michaels-Ratner-Dec-2016.pdf?attachauth=ANoY7cqBsnMuAUubinL1theU6u9_yzW5SKCoaDROPw6OsYcCZY6zOr7VCZKJwEpX3etYAqXPve6fQIClVTEyH-hPtNSfrqErOMTe_aL3khvVbPul9xGlWcrDNn9H6HXTw00rt2mdXHSkxFVyaOJ-aA-zTweCQ6LfVdpBgHyyn7yW5M8XQqvC1OrLJRtznKl-sLZ29xiprdVeHkMqAfH3FjDvQxKc7ufmjI97DGqFcVkZin7ZWoYPVOE%3D&attredirects=0

1 Finished

MacCaLM: Labour and Credit Market Foundations of the Macroeconomy
Moore, J. (Principal Investigator), Belot, M. (Co-investigator), Elsby, M. (Co-investigator), Guell, M. (Co-investigator), Kircher, P. (Co-investigator), Rodriguez Mora, S. (Co-investigator), Snell, A. (Co-investigator), Thomas, J. (Co-investigator), Visschers, L. (Co-investigator), Worrall, T. (Co-investigator) & Zymek, R. (Other)
ESRC
1/06/15 → 31/05/22
Project: Research

1 Article

The aggregate effects of labor market frictions
Elsby, M., Michaels, R. & Ratner, D., Jul 2019, In: Quantitative Economics. 10, 3, p. 803-852
Research output: Contribution to journal › Article › peer-review

Open Access
File

1 Participation in workshop, seminar, course
1 Invited talk

39th Annual NBER Summer Institute
Elsby, M. (Participant)
11 Jul 2016 → 29 Jul 2016
Activity: Participating in or organising an event types › Participation in workshop, seminar, course
Seminar on "The Aggregate Effects of Labor Market Frictions" at St Louis Federal Reserve Bank
Elsby, M. (Speaker)
May 2016
Activity: Academic talk or presentation types › Invited talk

Mike Elsby
- School of Economics - PROFESSOR OF ECONOMICS
Person: Academic: Research Active

Cite this

Elsby, M., & Michaels, R. (2016). The aggregate effects of Labor Market Frictions. (pp. 1-50). https://68088b26-a-62cb3a1a-s-sites.googlegroups.com/site/mikeelsby/Elsby-Michaels-Ratner-Dec-2016.pdf?attachauth=ANoY7cqBsnMuAUubinL1theU6u9_yzW5SKCoaDROPw6OsYcCZY6zOr7VCZKJwEpX3etYAqXPve6fQIClVTEyH-hPtNSfrqErOMTe_aL3khvVbPul9xGlWcrDNn9H6HXTw00rt2mdXHSkxFVyaOJ-aA-zTweCQ6LfVdpBgHyyn7yW5M8XQqvC1OrLJRtznKl-sLZ29xiprdVeHkMqAfH3FjDvQxKc7ufmjI97DGqFcVkZin7ZWoYPVOE%3D&attredirects=0

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KW - firm dynamics

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The aggregate effects of Labor Market Frictions

Abstract

Keywords / Materials (for Non-textual outputs)

Access to Document

Fingerprint

Projects

MacCaLM: Labour and Credit Market Foundations of the Macroeconomy

Research output

The aggregate effects of labor market frictions

Activities

39th Annual NBER Summer Institute

Seminar on "The Aggregate Effects of Labor Market Frictions" at St Louis Federal Reserve Bank

Profiles

Mike Elsby

Cite this