THE CYCLICAL BEHAVIOR OF THE UNEMPLOYMENT, SEPARATION AND JOB FINDING RATES

In this paper, we determine a particular calibration that makes the search and matching model able to replicate the unemployment volatility with the right contributions for the job finding and destruction rates. We stress a significant mechanism of the model: introducing cyclical destructions amplifies the volatility of the job finding rate. This mechanism implies that the model with endogenous destructions does not require real wage rigidities. It also implies that the value for the employment opportunity cost necessary to reproduce all the volatilities is lower than the one used in the model with exogenous destruction and more realistic.