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The Vanishing Procyclicality of Labour Productivity

Jordi Galí () and Thijs van Rens ()

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We document two changes in postwar US macroeconomic dynamics: the procyclicality of labour productivity vanished, and the relative volatility of employment rose. We propose an explanation for these changes that is based on reduced hiring frictions due to improvements in information about the quality of job matches and the resulting decline in turnover. We develop a simple model with hiring frictions and variable e§ort to illustrate the mechanisms underlying our explanation. We show that our model qualitatively and quantitatively matches the observed changes in business cycle dynamics

Keywords: labour hoarding, hiring frictions, e§ort choice JEL Classification: E24; E32 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-dge, nep-mac and nep-opm
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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp477.2020.pdf

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Working Paper: The Vanishing Procyclicality of Labor Productivity (2010) Downloads
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Working Paper: The vanishing procyclicality of labor productivity (2010) Downloads
Working Paper: The vanishing procyclicality of labor productivity (2010) Downloads
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