Fabien Tripier

Can the labor market search model explain the fluctuations of allocations of time

Abstract We examine whether the labor market search model can account for the business cycle facts on the three uses of time: employment, unemployment and non-participation. The standard search model is modified by making endogenous the time allocation decision between market and non-market activities. Despite its good performance on the employment rate, this framework fails to mimic the empirical dynamics on the two other uses of time, notably the strongly countercyclical behavior of the unemployment rate. This conclusion is shown to be robust to the specification of households’ preferences.