Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Bank of Finland Research Discussion Papers, Bank of Finland

No 15/2009:
Productivity and job flows: Heterogeneity of new hires and continuing jobs in the business cycle

Juha Kilponen () and Juuso Vanhala ()

Abstract: This paper focuses on productivity dynamics of a firm-worker match as a potential explanation for the ‘unemployment volatility puzzle’. We let new matches and continuing jobs differ in terms of productivity level and sensitivity to aggregate productivity shocks. As a result, new matches have a higher destruction rate and lower, but more volatile, wages than old matches, as new hires receive technology associated with the latest vintage. In our model, an aggregate productivity shock generates a persistent productivity difference between the two types of matches, creating an incentive to open new productive vacancies and to destroy old matches that are temporarily less productive. The model produces a well behaved Beveridge curve, despite endogenous job destruction and more volatile vacancies and unemployment, without needing to rely on differing wage setting mechanisms for new and continuing jobs.

Keywords: matching; productivity shocks; new hires; continuing jobs; job flows; Beveridge curve; vintage structure; (follow links to similar papers)

JEL-Codes: E24; E32; J64; (follow links to similar papers)

48 pages, July 1, 2009

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

0915netti.pdf    PDF-file
Download Statistics
This paper is published as:
Kilponen, Juha and Juuso Vanhala, (2014), 'Sensitivity of Job Destruction to Vintage and Tenure Effects', The Scandinavian Journal of Economics, Vol. 116, October, No. 4, pages 1068-1090

Questions (including download problems) about the papers in this series should be directed to Minna Nyman ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:bofrdp:2009_015 This page was generated on 2014-12-14 19:21:35