Effect of Labor Market Power on On-the-Job Search (Job Market Paper)
This paper introduces firm labor market power, as modeled in Jarosch, Nimczik & Sorkin(2019), into a model with labor search frictions and on-the-job search, similar to Krause & Lubik (2006), and shows that labor market power can lead to slower recoveries in on-the-job search, job transitions, wages and employment in the event of an aggregate productivity shock. Higher levels of labor market power benefit the firm's bargaining position, create incentives against on-the-job search and lead to lower steady state levels of on-the-job search and job transitions. Labor Market Concentration amplifies the response of wages, employment and output.
Banking Frictions in a Model with Labor Search (in progress)
This paper introduces banking frictions modeled in Gertler and Karadi (2011) into a model of labor search and analyzes the interaction between banking constraints and labor search. An analytical expression for the steady state elasticity of market tightness to productivity is calculated to show that an increase in the degree of banking friction increases volatility of labor market tightness and this volatility can be lowered if the leverage ratio is sufficiently high. Adding banking frictions to a model with labor search frictions helps to not only match labor market responses, but simultaneously generate greater declines in macroeconomic aggregates of capital and investment.