01666cas a2200253 a 4500 AALejournalIMF007192 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455262403 1018-5941 BD-DhAAL BD-DhAAL Tasci, Murat. Search Frictions and the Labor Wedge / Murat Tasci, Andrea Pescatori. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper shows that labor market search frictions do not explain fluctuations in the labor wedge per se. However, the introduction of extensive and intensive margin clarifies that measuring the MRS in terms of total hours artificially introduces procyclicality in the MRS. When the MRS is correctly measured in terms of hours per worker, the labor wedge obtained is less variable than the one of the competitive model. Finally, we show that it is possible to measure a strongly procyclical labor wedge when the actual data generating process is a search model that allows for movements in both margins. Mode of access: Internet Pescatori, Andrea. IMF Working Papers; Working Paper ; No. 2011/117 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/117/001.2011.issue-117-en.xml IMF e-Library