Jobs, Unemployment, and Macroeconomic Transmission

Abstract: Measuring Job Openings: Evidence from Swedish Plant Level Data. In modern macroeconomic models “job openings'' are a key component. Thus, when taking these models to the data we need an empirical counterpart to the theoretical concept of job openings. To achieve this, the literature relies on job vacancies measured either in survey or register data. Insofar as this concept captures the concept of job openings well we should see a tight relationship between vacancies and subsequent hires on the micro level. To investigate this, I analyze a new data set of Swedish hires and job vacancies on the plant level covering the period 2001-2012. I find that vacancies contain little power in predicting hires over and above (i) whether the number of vacancies is positive and (ii) plant size. Building on this, I propose an alternative measure of job openings in the economy. This measure (i) better predicts hiring at the plant level and (ii) provides a better fitting aggregate matching function vis-à-vis the traditional vacancy measure.Firm Level Evidence from Two Vacancy Measures. Using firm level survey and register data for both Sweden and Denmark we show systematic mis-measurement in both vacancy measures. While the register-based measure on the aggregate constitutes a quarter of the survey-based measure, the latter is not a super-set of the former. To obtain the full set of unique vacancies in these two databases, the number of survey vacancies should be multiplied by approximately 1.2. Importantly, this adjustment factor varies over time and across firm characteristics. Our findings have implications for both the search-matching literature and policy analysis based on vacancy measures: observed changes in vacancies can be an outcome of changes in mis-measurement, and are not necessarily changes in the actual number of vacancies.Swedish Unemployment Dynamics. We study the contribution of different labor market flows to business cycle variations in unemployment in the context of a dual labor market. To this end, we develop a decomposition method that allows for a distinction between permanent and temporary employment. We also allow for slow convergence to steady state which is characteristic of European labor markets. We apply the method to a new Swedish data set covering the period 1987-2012 and show that the relative contributions of inflows and outflows to/from unemployment are roughly 60/30. The remaining 10\% are due to flows not involving unemployment. Even though temporary contracts only cover 9-11\% of the working age population, variations in flows involving temporary contracts account for 44\% of the variation in unemployment. We also show that the importance of flows involving temporary contracts is likely to be understated if one does not account for non-steady state dynamics.The New Keynesian Transmission Mechanism: A Heterogeneous-Agent Perspective. We argue that a 2-agent version of the standard New Keynesian model---where a ``worker'' receives only labor income and a “capitalist'' only profit income---offers insights about how income inequality affects the monetary transmission mechanism. Under rigid prices, monetary policy affects the distribution of consumption, but it has no effect on output as workers choose not to change their hours worked in response to wage movements. In the corresponding representative-agent model, in contrast, hours do rise after a monetary policy loosening due to a wealth effect on labor supply: profits fall, thus reducing the representative worker's income. If wages are rigid too, however, the monetary transmission mechanism is active and resembles that in the corresponding representative-agent model. Here, workers are not on their labor supply curve and hence respond passively to demand, and profits are procyclical.