Inter-sectoral Labor Immobility, Sectoral Co-movement, and News Shocks
Munechika Katayama () and
Kwang Hwan Kim
Discussion papers from Graduate School of Economics , Kyoto University
The sectoral co-movement of output and hours worked is a prominent feature of business cycle data. However, most two-sector neoclassical models fail to generate this sectoral comovement. We construct and estimate a two-sector neoclassical DSGE model that generates the sectoral co-movement in response to both anticipated and unanticipated shocks. The key to our model’s success is a significant degree of inter-sectoral labor immobility, which we estimate using data on sectoral hours worked. Furthermore, we demonstrate that imperfect inter-sectoral labor mobility provides a better explanation for the sectoral co-movement than some alternative model emphasizing the role of labor-supply wealth e?ects.
Keywords: Sectoral Co-movement; Labor Immobility; Non-separable Preferences; Unanticipated; Shocks; News Shocks. (search for similar items in EconPapers)
JEL-codes: E32 E13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: Intersectoral Labor Immobility, Sectoral Comovement, and News Shocks (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-15-011
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