Skip to Main Content
University of Texas University of Texas Libraries

ECO 350K Macroeconomics of Labor Market

Recommended Reading List

Albanesi S. and Sahin, A., 2018. The Gender Unemployment Gap," Review of Economic Dynamics, Vol. 30, pages 47-67, October.

Abstract: The gender unemployment gap, the difference between female and male unemployment rates, was positive until the early 1980s. This gap disappeared after 1983, except during recessions, when men's unemployment rate has always exceeded women's. Using a calibrated three-state search model, we show that the convergence in female and male labor force attachment accounts for most of the closing of the gender unemployment gap. Evidence from nineteen OECD countries is consistent with this finding. We show that gender differences in industry composition are the main source of the cyclicality of the unemployment gap.

Crump, R. K., Eusepi, S. Giannoni, M. and Aysegul, S. 2019. “A Unified Approach to Measuring u*” BPEA Conference Draft, Spring, 143-238.

Abstract- This paper bridges the gap between two popular approaches to estimating the natural rate of unemployment, ut. The first approach uses detailed labor market indicators such as labor market flows, cross-sectional data on unemployment and vacancies or various measures of demographic changes. The second approach which comprises reduced form models and DSGE models relies mainly on price and wage Phillips curve relationships, together with model-specific assumptions on aggregate demand.

Crump R., Eusepi S., Giannoni M. and A. Sahin. Inflation-Unemployment Trade-off Revisited: u  in Covid Times," December 2021 (final draft February 2022- see below)

Abstract- We estimate the natural rate of unemployment, often referred to as u*, in the United States using data on labor market flows, short-term and long-term inflation expectations and a forward looking New-Keynesian Phillips curve for the 1960-2021 period. The natural rate of unemployment was at around 4.5% before the onset of the pandemic and increased to 5.9% by the end of 2021.

Daly, M. C., Hobijn, B., Şahin, A., & Valletta, R. G. (2012). A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise? The Journal of Economic Perspectives, 26(3), 3–26.

Abstract- The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent.

Elsby, M. W. L., Michaels, R., & Ratner, D. (2015). The Beveridge Curve: A Survey†. Journal of Economic Literature, 53(3), 571–630.

Abstract- Important progress has been made in economists' understanding of the Beveridge curve, from its measurement to its expression in canonical labor market models. Yet enduring puzzles remain. Chief among these are the empirical role of vacancies in the recruitment process; the amplitude, co-movement, and persistence of cyclical unemployment-vacancy dynamics; and the sources of lateral shifts in the Beveridge curve. The synthesis of these themes identifies several priorities for ongoing research, including the role of entry costs into vacancy creation in shaping Beveridge dynamics; the cyclicality of search intensity, both off and on the job, and its relation to participation and job-to-job transitions; the theory and measurement of mismatch; and the sources of hysteresis in unemployment flows.

Elsby, M.W.L., Hobijn, B., & Şahin, A. (2010). The Labor Market in the Great Recession. Brookings Papers on Economic Activity 2010(1), 1-48.

Abstract- From the perspective of a wide range of labor market outcomes, the recession that began in 2007 represents the deepest downturn in the postwar era. Early on, the nature of labor market adjustment displayed a notable resemblance to that observed in past severe downturns. During the latter half of 2009, however, the path of adjustment exhibited important departures from that seen during and after prior deep recessions. Recent data point to two warning signs going forward. First, the record rise in long-term unemployment may yield a persistent residue of long-term unemployed workers with weak search effectiveness. Second, conventional estimates suggest that the extension of Emergency Unemployment Compensation may have led to a modest increase in unemployment. Despite these forces, we conclude that the problems facing the U.S. labor market are unlikely to be as severe as the European unemployment problem of the 1980s.

Forsyth L., Kahn, L. B., Lange, F and Wiczer, D. 2020. Labor Demand in the Time of COVID-19: Evidence from vacancy postings and UI claims, Journal of Public Economics, Vol. 189 (104238).

Abstract: We use job vacancy data collected in real time by Burning Glass Technologies, as well as unemployment insurance (UI) initial claims and the more traditional Bureau of Labor Statistics (BLS) employment data to study the impact of COVID-19 on the labor market. Our job vacancy data allow us to track the economy at disaggregated geography and by detailed occupation and industry. We find that job vacancies collapsed in the second half of March. By late April, they had fallen by over 40%. To a first approximation, this collapse was broad based, hitting all U.S. states, regardless of the timing of stay-at-home policies. UI claims and BLS employment data also largely match these patterns. Nearly all industries and occupations saw contraction in postings and spikes in UI claims, with little difference depending on whether they are deemed essential and whether they have work-from-home capability.

Ganong, P., Noel, P. J., & Vavra, J. S. (2020). US unemployment insurance replacement rates during the pandemic. Cambridge: National Bureau of Economic Research, Inc. doi:

Abstract- We use micro data on earnings together with the details of each state’s unemployment insurance (UI) system to compute the distribution of UI benefits after the uniform $600 Federal Pandemic Unemployment Compensation (FPUC) supplement implemented by the CARES Act. We find that between April and July 2020, 76% of workers eligible for regular Unemployment Compensation have statutory replacement rates above 100%, meaning that they are eligible for benefits which exceed lost wages. The median statutory replacement rate is 145%. 

Hobijn B. and A. Sahin. Maximum Employment and the Participation Cycle," Jackson Hole Symposium 2021.

Abstract- We investigate the source, magnitude, and unevenness of the procyclical forces that shape labor force participation, i.e., the participation cycle, which are important for the implementation of the maximum employment mandate. We show that these forces can be analyzed in real time using a flow decomposition of the changes in the labor force participation rate.

Kitao, S., A. Sahin and J. Song, 2011. Hiring Subsidies, Job Creation and Job Destruction," Economics Letters, Vol. 113 No. 3, pp.248-251.

Abstract: We quantify the effects of hiring subsidies using the model of Mortensen and Pissarides (2003). The job creation effect can be large in a weak labor market. However, in the long-run, subsidies raise the wage and equilibrium unemployment.

The Bathtub Model of Unemployment: The Importance of Labor Market Flow Dynamics," Liberty Street Economics (Blog) by A. Sahin and C. Patterson, 2012.

Abstract- An alternative to Okun’s law to understand unemployment dynamics is to examine the evolution of the unemployment inflow and outflow rates. (For more on Okun’s law, see yesterday’s post.) A useful analogy is a bathtub: we can think of the unemployment rate (a stock) as the amount of water in a bathtub.

Şahin, A., Tasci, M. and Yan, J. 2020. “The Unemployment Cost of COVID-19: How High and How Long?” Federal Reserve Bank of Cleveland, Economic Commentary 2020-09.

Abstract- In this Economic Commentary we analyze flows into and out of unemployment—utilizing what is commonly referred to as a flows-based approach—to provide tentative answers to these questions. This approach produces less stark projections for the unemployment rate over the course of the next year than some of the more alarming projections that have been reported. In preparing our projections, we make several assumptions about the nature of the economic shock we are undergoing and the prospects for the reversal of the mitigation policies currently in place.


Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 Generic License.