The determinants of equilibrium unemployment

Eran Yashiv*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

85 Scopus citations

Abstract

The paper takes the search and matching model of the aggregate labor market to the data. It tests the model's empirical validity and employs structural estimation to generate a characterization of the optimal behavior of firms and workers. The model is applied to Israeli data that are uniquely suited for this kind of empirical investigation. The structural estimates are used to quantify the frictions embodied in the model, including the costs of search, the congestion and trading externality effects, and the matching process. A calibration-simulation analysis then studies the effect of several key variables on equilibrium unemployment.

Original languageEnglish
Pages (from-to)1297-1322
Number of pages26
JournalAmerican Economic Review
Volume90
Issue number5
DOIs
StatePublished - Dec 2000

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