Labor shifts and economic fluctuations
Yongsung Chang () and
Frank Schorfheide ()
No 03-07, Working Paper from Federal Reserve Bank of Richmond
We propose a new VAR identification scheme that distinguishes shifts of and movements along the labor demand schedule to identify labor-supply shocks. According to our VAR analysis of post-war U.S. data, labor-supply shifts account for about 30 percent of the variation in hours and about 15 percent of the output fluctuations at business cycle frequencies. To assess the role of labor-supply shifts in a more structural framework, estimates from a dynamic general equilibrium model with stochastic variation in home production technology are compared to those from the VAR.
Keywords: Labor supply; Economics (search for similar items in EconPapers)
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