This paper aims at explaining the dynamics of labor markets in Spain, especially the high persistence of unemployment and the Beveridge curve. We build a stochastic dynamic general equilibrium matching model, which assumes failures in the matching between vacancies and unemployed. We calibrate the model for the Spanish economy and simulate it considering two sources of exogenous shocks: a techn...

This paper extends the standard New Keynesian model by incorporating labor adjustment costs and overtime work. I show that labor frictions help reconcile the frequent price changes found in the microdata with the degree of sluggishness in inflation adjustment to output changes at the macro level. The introduction of labor frictions affects the dynamic behavior of economic variables (particularl...

The welfare cost of imperfect competition in the product and labor markets in the United States is quantified in a dynamic general equilibrium model. We find that the welfare cost of imperfect competition in the product market is 3.62 percent while it is 0.58 percent in the labor market, taking the transition path from the distorted to the optimal steady state into account. If we also take into...

This paper estimates the effect of Disability Insurance receipt on labor supply, accounting for the dynamic nature of the application process. Exploiting the effectively random assignment of judges to disability insurance cases, we use instrumental variables to address the fact that those allowed benefits are a selected sample. We find that benefit receipt reduces labor force participation by 2...

In this paper, we compare the effects of machine pooling and labor chaining by means of a simulation study. In this study, the independent variables are: (1) the level of machine pooling (no. of jobs that can be produced in more than one cell), (2) the level of labor chaining (no. of workers able to work in more than one cell), and (3) labor utilization/machine utilization. The dependent variab...

I present a two-country dynamic general equilibrium model of international outsourcing, consistent with the empirical observation that capital and unskilled labor are substitutes. The model predicts lower global savings and investment rates, lower real interest rates, and a change in the composition of U.S. foreign assets. The U.S. current account improves as a result of outsourcing. Nearly all...

Unskilled labor is the abundant resource in many developing countries, especially at an early stage of their development. Yet, even as at given technologies labor markets have not cleared, neo-classical economists have rejected the notion of an institutional or bargaining wage not based on competitive full employment marginal productivity fundamentals. This paper puts to rest some objections to...

cell formation problem mainly address how machines should be grouped and parts be processed in cells. in dynamic environments, product mix and demand change in each period of the planning horizon. incorporating such assumption in the model increases flexibility of the system to meet customer’s requirements. in this model, to ensure the reliability of the system in presence of unreliable machine...