Endogenous Separations, Wage Rigidities and Employment Volatility
نویسندگان
چکیده
We show that in micro data, as well as in a search and matching model with endogenous separations and rigid wages, separations and hence employment volatility are non-neutral to wage rigidities of incumbent workers. In contrast to when all wages are flexible, the standard deviation of unemployment in a model with rigid wages for incumbent workers (only) matches the standard deviation in the data. Thus, the degree of wage rigidity for newly hired workers is not a suffi cient statistic for determining the effect of wage rigidities on macroeconomic outcomes in this class of models.
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