I want to refer to the paper Aggregate implications of indivisible labor, incomplete markets, and labor market frictions. In Footnote 9, there is a brief explanation of how the separation rate is calibrated. I want to quote what it says:
"See Hobijn and Sahin (2007, Table 3). They report that the transition rate from unemployment to employment is on average 20% for 1976-2005. Consistent with this, we set $\lambda_w=0.2$ for our benchmark calibration. Hobijn and Sahin also report that employment to unemployment transition rate is on average 1.6% for the same sample period. Since $\lambda_w=0.2$ fraction of the unemployed workers find jobs in the same period, we set $\sigma=0.02$ which is consistent with a transition rate of 1.6%."
$\lambda_w$ is an exogenous job arrival rate and $\sigma$ is the exogenous separation rate. My question is , how can one get the value of $\sigma$? I mean, how can we use the 1.6% to get the $\sigma=0.02$? It makes sense that the trasition from unemployment to employment is 20%, so that $\lambda_w=0.2$, but I just cannot see this logic for $\sigma$.
Thank you for your help/comments in advance.