TY - JOUR AU - Sala, Luca AU - Söderström, Ulf AU - Trigari, Antonella TI - Structural and Cyclical Forces in the Labor Market During the Great Recession: Cross-Country Evidence JF - National Bureau of Economic Research Working Paper Series VL - No. 18434 PY - 2012 Y2 - October 2012 DO - 10.3386/w18434 UR - http://www.nber.org/papers/w18434 L1 - http://www.nber.org/papers/w18434.pdf N1 - Author contact info: Luca Sala IGIER, Università Bocconi Via Roentgen 1 20136 Milano Italy E-Mail: luca.sala@unibocconi.it Ulf Soderstrom Monetary Policy Department Sveriges Riksbank 10337 Stockholm Sweden Tel: +4687870829 Fax: +468210531 E-Mail: ulf.soderstrom@riksbank.se Antonella Trigari Bocconi University Via Roentgen 1 20136 Milano Italy Tel: +39 02 58363040 Fax: +39 02 58363302 E-Mail: antonella.trigari@unibocconi.it M1 - published as Luca Sala, Ulf Söderstrom, Antonella Trigari. "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence," in Francesco Giavazzi and Kenneth D. West, organizers, "NBER International Seminar on Macroeconomics 2012" University of Chicago Press (2013) M3 - presented at "ISOM", June 15-16, 2012 AB - We use an estimated monetary business cycle model with search and matching frictions in the labor market and nominal price and wage rigidities to study four countries (the U.S., the U.K., Sweden, and Germany) during the financial crisis and the Great Recession. We estimate the model over the period prior to the financial crisis and use the model to interpret movements in GDP, unemployment, vacancies, and wages in the period from 2007 until 2011. We show that contractionary financial factors and reduced efficiency in labor market matching were largely responsible for the experience in the U.S. Financial factors were also important in the U.K., but less so in Sweden and Germany. Reduced matching efficiency was considerably less important in the U.K. and Sweden than in the U.S., but matching efficiency improved in Germany, helping to keep unemployment low. A counterfactual experiment suggests that unemployment in Germany would have been substantially higher if the German labor market had been more similar to that in the U.S. ER -