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Stochastic Unemployment with Dynamic Monopsony

Coles, M and Mortensen, DT (2015) Stochastic Unemployment with Dynamic Monopsony. UNSPECIFIED. University of Essex, Department of Economics, Economics Discussion Papers, Colchester.

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Abstract

This paper considers an equilibrium labour market with on-the-job search where heterogeneous ?rms, both by productivity and size, post wages and choose optimal hiring strategies. There are aggregate and ?rm speci?c pro- ductivity shocks. Industry dynamics are rich. By comparing the market out- come to the competitive allocation, simple numerical examples establishes how dynamic monopsony generates excessive job-to-job turnover, excessive job destruction rates at low productivity ?rms and so generates "too high" unemployment. It explains why gross hire ?ows and gross separation ?ows may be large and volatile, yet yield an unemployment process which is highly persistent.

Item Type: Monograph (UNSPECIFIED)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 30 Jul 2015 14:47
Last Modified: 06 Jan 2022 13:20
URI: http://repository.essex.ac.uk/id/eprint/14457

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