Separation costs, job heterogeneity and labor market volatility in the matching model |
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| Authors: | Jos I Silva Manuel Toledo |
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| Institution: | aUniversitat Jaume I de Castelló, Casmpus de Riu Sec, Castelló, 12071, Spain;bUniversidad Carlos III de Madrid, Spain |
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| Abstract: | This paper extends the standard matching model by introducing a gap in separation costs between entrant and incumbent workers. We show that when this gap is omitted from the model, these costs do not improve the labor market volatility without introducing unrealistic unemployment responses to unemployment benefits. |
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| Keywords: | Labor markets Matching Insider– outsider Separation costs Business cycles |
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