TY - BOOK ID - 84543005 TI - Search Frictions and the Labor Wedge AU - Tasci, Murat. AU - Pescatori, Andrea. PY - 2011 SN - 146239700X 1455262366 1283551853 9786613864307 1455258369 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Labor market KW - Business cycles KW - Employees KW - Market, Labor KW - Supply and demand for labor KW - Markets KW - Econometric models. KW - Supply and demand KW - Labor KW - Macroeconomics KW - Employment KW - Unemployment KW - Wages KW - Intergenerational Income Distribution KW - Aggregate Human Capital KW - Aggregate Labor Productivity KW - Business Fluctuations KW - Cycles KW - Unemployment: Models, Duration, Incidence, and Job Search KW - Labor Economics: General KW - Demand and Supply of Labor: General KW - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) KW - Labour KW - income economics KW - Economic growth KW - Labor market frictions KW - Labor markets KW - Labor economics KW - Economic theory KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84543005 AB - This paper shows that labor market search frictions do not explain fluctuations in the labor wedge per se. However, the introduction of extensive and intensive margin clarifies that measuring the MRS in terms of total hours artificially introduces procyclicality in the MRS. When the MRS is correctly measured in terms of hours per worker, the labor wedge obtained is less variable than the one of the competitive model. Finally, we show that it is possible to measure a strongly procyclical labor wedge when the actual data generating process is a search model that allows for movements in both margins. ER -