Supersedes Working Paper 14-3/R - Recall and Unemployment

The probability of recall is much less procyclical and volatile than the probability of finding a new employer. The authors add to a quantitative, and otherwise canonical, search-and-matching model of the labor market a recall option, which can be activated freely following aggregate and job-specific productivity shocks. Recall and search effort significantly amplify the cyclical volatility of new job-finding and separation probabilities.