Counter-cyclical Congestion

Research on Monday Seminar
Petr Sedláček
Start date

Monday, 21 Sep 2020, 12:00

End date

Monday, 21 Sep 2020, 13:00

Recessions are time when more unemployed find jobs. If new hires and incumbent workers are not perfect substitutes in production, this creates countercyclical congestion. We integrate this channel into an otherwise standard search model.

In recessions, when unemployment-to-employment flows rise, new hires become relatively abundant pushing down their marginal product. This generates a strong amplification mechanism.

Our model is consistent with a range of macroeconomic regularities: (i) volatility of labor market variables, (ii) strongly negative Beveridge curve, (iii) countercyclicality of the labor wedge, (iv) large displacement costs over the business cycle and (v) the relative insensitivity to labor market policies.

About the speaker

Petr Sedláček works on various macro labor topics. He has published in American Economic Review, Journal of European Economic Association, and Journal of Monetary Economics

More information

If you want to attend this online seminar, you need to register. You will then be sent by email the details of the zoom session.

Please request a bilateral before Thursday 17 September, 09:00