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Mismatch Cycles

Author

Listed:
  • Isaac Baley

    (Universitat Pompeu Fabra & Barcelona GSE)

  • Ana Figueiredo

    (Universitat Pompeu Fabra and Barcelona GSE)

  • Robert Ulbricht

    (Toulouse School of Economics)

Abstract
Using a recently developed worker-occupation mismatch measure for the US labor market, we document that mismatch is procyclical. However, there is substantial heterogeneity by previous employment status: mismatch is procyclical for workers in ongoing job relationships, consistent with the cleansing effect of recessions; but it is countercyclical for the flow of new hires from unemployment, consistent with the sullying effect of recessions. Our empirical findings show that the cleansing effect dominates. We also provide evidence that, conditional on mismatch, business cycle conditions at the start of the match are important in explaining variation in job duration. We explain these empirical patterns through a learning model à la Jovanovic (1979) augmented with adjustment costs and a learning technology that varies over the business cycle.

Suggested Citation

  • Isaac Baley & Ana Figueiredo & Robert Ulbricht, 2018. "Mismatch Cycles," 2018 Meeting Papers 1098, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1098
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    Cited by:

    1. Isaac Baley & Laura Veldkamp, 2021. "Bayesian learning," Economics Working Papers 1797, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Giorgio Brunello & Patricia Wruuck, 2021. "Skill shortages and skill mismatch: A review of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1145-1167, September.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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