Ebell, Monique (2008) Resurrecting the participation margin. CEPDP, 873. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282808
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This paper considers a real business cycle model with search frictions in the labor market and labor supply which is elastic along the extensive (participation) margin. Previous authors have found that such models generate counterfactually procyclical unemployment and a positively-sloped Beveridge curve. This paper presents a calibrated model which does indeed generate countercyclical unemployment and a negatively-sloped Beveridge curve despite the presence of a participation margin.
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