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The Cyclicality of the User Cost of Labor with Search and Matching, Working Paper 09-12R

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The Cyclicality of the User Cost of Labor with Search and Matching, Working Paper 09-12R

DATE: March 2013

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ABSTRACT: The user cost of labor captures the hiring wage and the expected effect of the economic conditions at the time of hiring on future wages. In search and matching models, I show that it is the user cost and not the wage that is weighted against the worker's marginal product at the time of hiring; so, the user cost is the allocational variable. I construct its measure in the data and estimate that it is more procyclical than average wages or wages of newly hired workers. I show that the textbook search and matching model cannot simultaneously generate the empirical elasticities of the vacancy-unemployment ratio and of the user cost of labor, irrespectively of the surplus division rule.

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Kudlyak, Marianna. "The Cyclicality of the User Cost of Labor with Search and Matching, Working Paper 09-12R," Working Papers (Federal Reserve Bank of Richmond) (March 2013). https://fraser.stlouisfed.org/title/3942/item/477186, accessed on May 13, 2024.

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PUBLISHER: Federal Reserve Bank of Richmond

PLACE: Richmond

EDITION: Revised

DIGITAL COPY SOURCE: Federal Reserve Bank of Richmond

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