Staggered Wages, Sticky Prices, and Labor Market Dynamics in Matching Models

Authors

• Neugebauer
• J.
• Wesselbaum
• D.

Publication Date

JEL Classification

Key Words

This paper investigates the role of staggered wages and sticky prices in explaining stylized

labor market facts. We build on a partial equilibrium search and matching model and expand

the model to a general equilibrium model with sticky prices and/or staggered wages. We show

that the core model creates too much volatility in response to a technology shock. The sticky

price model outperforms the staggered wage model in terms of matching volatilities, while the

combination of both rigidities matches the data reasonably well.