Business Cycles, Unemployment and Job Search : Essays in Macroeconomics and Labor Economics

Abstract: This thesis consists of four essays.The first essay, "Separations, Sorting and Cyclical Unemployment", establishes a new fact about the compositional changes in the pool of unemployed over the U.S. business cycle and evaluates a number of theories that can potentially explain it. Using longitudinal micro-data from the Current Population Survey 1979-2008, it documents that in recessions the pool of unemployed shifts towards workers with high wages in their previous job. The essay also shows that a search-matching model with endogenous separations and worker heterogeneity in terms of ability has difficulty in explaining these patterns, but an extension of the model with credit-constraint shocks does much better in accounting for the new fact.The second essay, "The Lot of the Unemployed: A Time Use Perspective", provides new evidence on the time use of employed and unemployed individuals in 14 countries. It devotes particular attention to characterizing and modeling job search intensity, measured by the amount of time devoted to searching for a new job. Job search intensity varies considerably across countries, and is higher in countries that have higher wage dispersion.The third essay, "Job Search and Unemployment Insurance: New Evidence from Time Use Data", examines the relationship between Unemployment Insurance and job search intensity. Among the major findings are that, across the U.S. states, job search is inversely related to the generosity of unemployment benefits and that job search intensity for those eligible for Unemployment Insurance increases prior to benefit exhaustion.The fourth essay, "On-the-Job Search and Wage Dispersion: New Evidence from Time Use Data", finds that on-the-job search effort, modeled as time allocated to job search activities, is decreasing in the wage of the current job. The evidence presented is consistent with models where similar workers face wage dispersion and invest time in order to find better paying jobs.