Ludo Visschers

Department of Economics
Universidad Carlos III, Madrid
Calle Madrid 126, Getafe 28903

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Institutional Affiliation: Universidad Carlos III de Madrid

NBER Working Papers and Publications

June 2020Revisiting the Hypothesis of High Discounts and High Unemployment
with Paolo Martellini, Guido Menzio: w27428
We revisit the hypothesis that cyclical fluctuations in unemployment are caused by shocks to the discount rate. We use a rich search-theoretic model of the labor market in which the UE, EU and EE rates are all endogenous. Analytically, we show that an increase in the discount rate lowers the UE rate and, under some natural conditions, it lowers the EU rate. Quantitatively, we show that an increase in the discount rate from 4 to 10% generates a 3.5% decline in the UE rate and a 6% decline in the EU rate. The response of the unemployment rate is minuscule. These findings are at odds with the actual behavior of the US labor market over the business cycle, which features a negative comovement between the UE and EU rates and large unemployment fluctuations. We show that aggregate productivity s...
January 2012Directed Search over the Life Cycle
with Guido Menzio, Irina A. Telyukova: w17746
We develop a life-cycle model of the labor market in which different worker-firm matches have different quality and the assignment of the right workers to the right firms is time consuming because of search and learning frictions. The rate at which workers move between unemployment, employment and across different firms is endogenous because search is directed and, hence, workers can choose whether to seek low-wage jobs that are easy to find or high-wage jobs that are hard to find. We calibrate our theory using data on labor market transitions aggregated across workers of different ages. We validate our theory by showing that it correctly predicts the pattern of labor market transitions for workers of different ages. Finally, we use our theory to decompose the age profiles of transition ra...

Published: Guido Menzio & Irina Telyukova & Ludo Visschers, 2016. "Directed Search over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19(1), January. citation courtesy of

March 2008Labor Market Fluctuations in the Small and in the Large
with Richard Rogerson, Randall Wright: w13872
Shimer's calibrated version of the Mortensen-Pissarides model generates unemployment fluctuates much smaller than the data. Hagedorn and Manovskii present an alternative calibration that yields fluctuations consistent with the data, but this has been challenged by Costain and Reiter, who say it generates unrealistically big differences in unemployment from the differences in policy we sees across countries. We argue this concern may be unwarranted, because one cannot assume elasticities relevant for small changes work for large changes. Models with fixed factors in market or household production can generate large effects from small changes and reasonable effects from large changes. This is reminiscent of attempts to improve the labor market in the Kydland-Prescott model, especially ones i...

Published: Richard Rogerson & Lodewijk P. Visschers & Randall Wright, 2009. "Labor market fluctuations in the small and in the large," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 125-137. citation courtesy of

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