The Vanishing Procyclicality of Labor Productivity

Jordi Galí and Thijs van Rens

No 270221, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity vanished, (ii) the relative volatility of employment rose, and (iii) the relative (and absolute) volatility of the real wage rose. We propose an explanation for all three changes that is based on a common source: the decline in labor market turnover, which reduced hiring frictions. We develop a simple model with hiring frictions, variable e§ort, and endogenous wage rigidities to illustrate the mechanisms underlying our explanation. We show that the decline in turnover may also have contributed to the observed decline in output volatility

Keywords: Financial Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 47
Date: 2014-01-01
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Vanishing Procyclicality of Labour Productivity (2021)
Working Paper: The Vanishing Procyclicality of Labour Productivity (2020)
Working Paper: The Vanishing Procyclicality of Labour Productivity (2020)
Working Paper: The Vanishing Procyclicality of Labor Productivity (2015)
Working Paper: The Vanishing Procyclicality of Labor Productivity (2014)
Working Paper: The Vanishing Procyclicality of Labor Productivity (2014)
Working Paper: The Vanishing Procyclicality of Labor Productivity (2010)
Working Paper: The Vanishing Procyclicality of Labor Productivity (2010)
Working Paper: The vanishing procyclicality of labor productivity (2010)
Working Paper: The vanishing procyclicality of labor productivity (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270221

DOI: 10.22004/ag.econ.270221

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