Works in Progress: -

Labor Economics/Macroeconomics

"Vacancies and Unemployment in a Two Sector Search Framework"

Abstract: The paper develops a two sector search model to analyze the behavior of vacancies and unemployment as a result of persistent exogenous shocks. I will analyze both the random search and the sector specific search versions of the model. Since the mid 1980s, the U.S. economic data shows positive correlation between unemployment and labor productivity. Standard one sector search models cannot explain this counter intuitive fact. Shimer (2005) showed that one sector search and matching models cannot generate the observed business cycle fluctuations in vacancies and unemployment as a result of exogenous productivity shocks of plausible nature. The two sector search models are slightly better in explaining the relationship between vacancies and unemployment as a result of productivity shocks compared to one sector version. In a two sector search model, exogenous productivity shock to one sector can spillover to other sector through changes in consumer demand as a result of change in relative wages across sectors. Also preference changes and variations in bargaining power of the workers can have substantial impact on the movements of vacancies and unemployment. The model also been able to generate the counter intuitive positive correlation between unemployment and labor productivity as observed in the U.S. data. Efficiency properties of the two sector search model are analyzed under particular division of bargaining power as proposed by Hosios (1990).

Econometrics 

"Estimating Matching Function using JOLTS Data"

In the literature of labor search theory, matching function played pivotal role. In this context various attempts had been made to estimate the matching function. Often these estimations were plagued with paucity of data. In recent years, Bureau of Labor Statistics has come up with new data product called JOLTS. The survey is the only existing data source to measure vacancies, hires and separations at the establishment level at a regular monthly frequency in the U.S. The purpose of this paper is to estimate labor market matching function for U.S. using JOLTS data. JOLTS also reports data at 2-digit NAICS sectoral level. Hence using the data sectoral matching functions are also estimated. It turned out that constant returns to scale does dominate the matching function, which is in conformity with past studies.

System Dynamics

Developing a System Dynamics model to explain the observed variance in the Vacancy - Unemployment ratio in the event of technology shock. The primary purpose of undertaking this work is to explore the possibility of applying System Dynamics framework in explaining the economic issues.