NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Aggregate Matching Function

Olivier Jean Blanchard, Peter A. Diamond

NBER Working Paper No. 3175 (Also Reprint No. r1561)
Issued in November 1989
NBER Program(s):   EFG   ME

We present a picture of the labor market, one with large flows of jobs and workers, and matching. We develop a consistent approach to the interaction among those flows and the stocks of unemployed workers and vacant jobs, and to the determination of wages. We estimate the matching function, using both aggregate data and data from manufacturing and find evidence of a stable matching process in the data. We examine the joint movements in unemployment, vacancies and wages -the Beveridge and Phillips curve relations- in the light of our model. We conclude that aggregate activity shocks rather than reallocation shocks dominate the movement of unemployment.

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Document Object Identifier (DOI): 10.3386/w3175

Published: Growth/Productivity/Unemployment, edited by Peter Diamond, pp. 159-201. Cambridge, MA: MIT Press, 1990.

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