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Wei-Fong Pan (Virtual Seminar)
Title: The labour market effect of fiscal policy uncertainty
Abstract: This study examines the effect of fiscal policy uncertainty (FPU) on job searches and labour demand in the United States. We first develop search-based job search indices and find that increased FPU leads to higher job search levels. However, rising FPU reduces labour demand as we observe that the number of online job postings by firms declines significantly in response to increasing FPU. The effect of FPU varies across different groups of individuals and regions, while also being subject to monetary policy stance. Labour market institutions are key to explain such differences. Lastly, FPU reduces matching efficiency in labour markets. These results are robust to alternative specifications and after isolating the effect of uncertainty from risk.