Variable Labor Adjustment Costs and Aggregate Nonlinear Dynamics Simulation Based Estimation and Testing with Us Data

This paper investigates a model of labor-market search, where rms operate under uncertainty. The paper starts from a descriptive approach with U.S. hours worked data. EEciency units display signiicant nonlinearities and speciication tests allow to select a exi-ble non-linear model. We assess the ability of the structural model to mimic these empirical features. Since the reduced form induces un-tractable likelihood function, we investigate the model performances on the basis of an auxiliary model using a simulation based estimation and testing method. The results shows that our simple theoretical representation of the labor market is able to match the behavior of US eeciency unit of hours worked along a various dimensions, i.e. persistence and non-linearities.