Equilibrium Unemployment Theory and Developments in the Finnish Labor Market
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School of Business | Bachelor's thesis
AbstractThis 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.
Thesis advisorMurto, Pauli
labor economics, matching, mismatch unemployment, Beveridge curve, labour market