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Matthias Doepke - Marcroeconomics - Chapter 10

Chapter 10 Unemployment The study of unemployment is usually cast as the study of workers. Several theories seek to explain why the labor market might not clear at a particular wage. Among these are “search” models, in which unemployed people are in the process of looking for work. | Chapter 10 Unemployment The study of unemployment is usually cast as the study of workers. Several theories seek to explain why the labor market might not clear at a particular wage. Among these are search models in which unemployed people are in the process of looking for work. One such model is presented in Chapter 10 of the Barro textbook. More-sophisticated theories attempt to explain unemployment as the breakdown in a matching process between workers and jobs. Public discussions of unemployment often conflate the two. In this chapter we will discuss some exciting new research on the statistical characteristics of jobs and employment in the United States. We will not attempt to provide theoretical explanations for the observed statistical patterns rather we will concentrate on the statistics themselves. The primary source for the material in this chapter is Job Creation and Destruction by Davis Haltiwanger and Schuh.1 Hereafter we will refer to this book simply as DHS . The book synthesizes research based on some important data sets regarding jobs and employment. This chapter can provide only a very broad outline of the book and the interested reader is strongly encouraged to obtain his or her own copy. The book is short accessible and every page contains something worth knowing. The authors use two previously untapped sets of data regarding manufacturing employment in the United States. They present evidence that the main statistical regularities of their data sets are also present in service industries and across countries. The data sets give them the number of jobs defined as filled employment positions at different establishments roughly factories over time. Most importantly they are able to track gross job flows over time i.e. how many jobs are created and how many are destroyed at each establishment. Standard measures track only net job flows i.e. the difference between the number created and the number destroyed. It turns out that net flows conceal an .