Explaining US employment growth after the great recession: The role of output–employment non-linearities

Menzie Chinn, Laurent Ferrara and Valérie Mignon ()

Journal of Macroeconomics, 2014, vol. 42, issue C, 118-129

Abstract: We investigate the relationship between employment and GDP in the United States. We disentangle trend and cyclical employment components by estimating a non-linear smooth transition error-correction model that simultaneously accounts for long-term relationships between growth and employment and short-run instability over the business cycle. Based on out-of-sample conditional forecasts, we conclude that, since the end of the 2008–09 recession, US employment is on average around 1% below the level implied by the long run output–employment relationship, meaning that about 1.2million of the trend employment loss cannot be attributed to the identified cyclical factors.

Keywords: Okun’s law; Trend employment; Non-linear modeling (search for similar items in EconPapers)
JEL-codes: C22 E24 E32 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (11)

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Working Paper: Explaining US employment growth after the Great Recession: the role of output-employment non-linearities (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:42:y:2014:i:c:p:118-129

DOI: 10.1016/j.jmacro.2014.07.003

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