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Daniel Tortorice
Job Market Paper
Separation-Rate Volatility and the Value of Work (Job Market Paper)
Abstract: Recent work on unemployment fluctuations has argued that: 1.) The probability of losing a job rises during recessions and 2.) The value of non-market activities is low compared to market activities. This paper evaluates the ability of search and matching models to explain the countercyclical separation rate when the value of unemployment is low. I find that models with i.i.d shocks to matches do not generate separation rate volatility. I consider two extensions of the model. The first allows for inefficient separations and the second for permanent shocks. Both can explain separations even with a low value of unemployment. Additionally, the two models fit the unemployment, vacancy, finding rate and separation-rate moments fairly well. Fluctuations in the separation rate are shown to be an important source of unemployment fluctuations.
Research Papers
Aggregate Consumption Volatility, Learning and Income Process Uncertainty
Abstract: In the permanent income model, consumption volatility depends crucially on the stationarity of the
income process. Additionally, a non-stationary and near non-stationary income processes are practically
indistinguishable in the US time series. Therefore, I model learning about the income process specification. The model matches several features of the US aggregate consumption data including: 1. the variance of consumption relative to income, 2. the rise and fall of this ratio over time and 3. estimated breaks in the variance of consumption. Additionally, I show that beliefs about the nature of the income process have substantial residual explanatory power for consumption changes.
Unemployment Expectations and the Business Cycle
Abstract: This paper finds that lagged unemployment changes distort consumers' expectations of future unemployment changes by studying unemployment expectations from the Michigan Survey of Consumers. This distortion results in insufficient pessimism at the beginning of a recession and excessive pessimism at the end of a recession. In fact, more people expect unemployment to rise when it is falling at the end of a recession than expect it to rise when it is rising at the beginning of a recession. This occurs despite the fact that a simple VAR is able to correctly predict the sign of the future unemployment change. The paper documents that least squares learning or real time expectations do little to help explain these facts. However, delayed updating of expectations can address some of these
puzzles and extrapolative expectations addresses these puzzles the best. Further analysis of the survey data indicates that those with higher income or education are only slightly less likely to make these expectational errors and the errors affect buying attitudes in a way that would increase the duration of recessions.
Publications
Objective and self-report work performance measures: a comparative analysis
(Joint with: Glenn Pransky, Stan Finkelstein, Ernst Berndt, Margaret Kyle, Joan Mackell)
International Journal of Productivity and Performance Management, 2006, Vol. 55, Issue 5, pp. 390 - 399
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