Chapter 1

The three empirical facts discussed in Chapter 1 are: (i) The cyclicality of hours worked, employment, and unemployment, (ii) Cyclical fluctuations in worker flows, and (iii) The dynamics of vacancies and the Beveridge Curve.

The search and matching model is a theoretical framework used to explain the dynamics of the labor market. It focuses on the process of job search and matching between job seekers and employers.

The Hosios condition is a condition that ensures the efficiency of the labor market in the search and matching model. It states that the ratio of the marginal product of labor to the vacancy creation cost should be equal across all firms.

<p>The unemployment-volatility puzzle refers to the empirical observation that fluctuations in unemployment are much larger than fluctuations in output. It is a puzzle because standard economic models predict a much smaller volatility of unemployment.</p> Signup and view all the answers

<p>The role of participation flows in unemployment fluctuations refers to the impact of changes in labor force participation on the level of unemployment. It examines how changes in the number of people actively seeking employment affect the overall unemployment rate.</p> Signup and view all the answers