TY  - JOUR
AU  - Krusell,Per
AU  - Mukoyama,Toshihiko
AU  - Rogerson,Richard
AU  - Sahin,Aysegul
TI  - Aggregate Labor Market Outcomes: The Role of Choice and Chance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15252
PY  - 2009
Y2  - August 2009
UR  - http://www.nber.org/papers/w15252
L1  - http://www.nber.org/papers/w15252.pdf
N1  - Author contact info:
Per Krusell
Institute for International Economic Studies
Stockholm University
106 91 STOCKHOLM
SWEDEN
E-Mail: per.krusell@iies.su.se

Toshihiko Mukoyama
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville VA 22904
E-Mail: tm5hs@virginia.edu

Richard Rogerson
Woodrow Wilson School of
  Public and International Affairs
323 Bendheim Hall
Princeton University
Princeton, NJ 08544
Tel: 609-258-4839
Fax: 609-258-5349
E-Mail: rdr@princeton.edu

Aysegul Sahin
Federal Reserve Bank of New York
Research & Statistics Group
33 Liberty Street
New York, NY  10045
Tel: 212-720-5145
E-Mail: Aysegul.Sahin@ny.frb.org
AB  - Commonly used frictional models of the labor market imply that changes in frictions have large effects on steady state employment and unemployment. We use a model that features both frictions and an operative labor supply margin to examine the robustness of this feature to the inclusion of a empirically reasonable labor supply channel. The response of unemployment to changes in frictions is similar in both models. But the labor supply response present in our model greatly attenuates the effects of frictions on steady state employment relative to the simplest matching model, and two common extensions. We also find that the presence of empirically plausible frictions has virtually no impact on the response of aggregate employment to taxes.
ER  -