Equilibrium Unemployment Theory and Developments in the Finnish Labor Market

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School of Business | Bachelor's thesis
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Date
2019
Major/Subject
Mcode
Degree programme
Taloustiede
Language
en
Pages
24
Series
Abstract
This thesis is a literature review of the most important theoretical concepts used for analyzing mismatch unemployment, namely the Beveridge curve and the Diamond-Mortensen-Pissarides search and matching model. I describe the foundations of the matching model and discuss the model’s comparative statics and cyclical adjustment mechanism. I also present Shimer’s critique of the matching model and the related theoretical debate, the so-called unemployment volatility puzzle. To conclude the thesis, I describe recent Beveridge curve developments in Finland and consider possible explanations for the increased mismatch in the Finnish labor market.
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Thesis advisor
Murto, Pauli
Keywords
labor economics, matching, mismatch unemployment, Beveridge curve, labour market
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