Endogenous Labor Market Cycles
نویسندگان
چکیده
In a perfectly stationary physical environment of the labor market, moral hazard and optimal termination in long-term contracts can generate two-period and much longer cycles in employment and output, and in other aggregate activities, including the creation and destruction of jobs, and the flows of workers entering and exiting employment. This theory sheds light on the unemployment volatility puzzle which has inspired many discussions in the literature.
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