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Table 2 Parameters of the dynamic stochastic labor-adjustment model

From: Who bears the cost of the business cycle? Labor-market institutions and volatility of the youth unemployment rate

Discount factor

β=0.98

Technology parameter for high and low economic condition

AH=0.4,AL=0.3

Wages for young and old workers

WY=0.05,WO=0.05

Elasticity of substitution between young and adult workers

σ=2.0 or 1.0

Parameter of adjustment cost of adult workers

α=0.005, 0.010, or 0.015

Parameter of hiring cost of young workers

γ=0.005

Persistence oftechnology shock

PH|H= PL|L = 0.75 or 0.50

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