Structural Change and Aggregate Employment Fluctuations in China and the US

Wen Yao and Xiaodong Zhu

Working Papers from University of Toronto, Department of Economics

Abstract: The correlation between the cyclical components of aggregate employment and GDP is highly positive in the US, but close to zero in China. We argue that the difference in the size of the agricultural sector is the reason for the difference in employment-output correlation. We construct a simple two-sector growth model with productivity shocks and non-homothetic preferences and show that the model can simultaneously account for the long-run structural change and short-run employment fluctuations at sector level and in the aggregate for both economies.

Keywords: Structural Change; Non-homothetic Preferences; Labor Reallocation; Aggregate Fluctuations (search for similar items in EconPapers)
JEL-codes: E24 E32 O41 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2018-04-14
New Economics Papers: this item is included in nep-cna, nep-mac, nep-opm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Structural Change and Aggregate Employment Fluctuations in China and the US (2018)
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