|
|
|
|
||||
|
||||
The Vanishing Procyclicality of Labor ProductivityJordi GalíUniversitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER) Thijs Van RensUniversity of Warwick - Department of Economics; CEPR; Institute for the Study of Labor (IZA) IZA Discussion Paper No. 5099 Abstract: We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity has vanished, (ii) the relative volatility of employment has risen, and (iii) the relative (and absolute) volatility of the real wage has risen. We propose an explanation for all three changes that is based on a common source: a decline in labor market frictions. We develop a simple model with labor market frictions, variable effort, and endogenous wage rigidities to illustrate the mechanisms underlying our explanation. We show that the reduction in frictions may also have contributed to the observed decline in output volatility.
Number of Pages in PDF File: 44 Keywords: wage rigidities, labor market frictions, labor hoarding, effort choice JEL Classification: E24, E32 working papers seriesDate posted: August 2, 2010Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo1 in 0.719 seconds
