The Vanishing Procyclicality of Labour Productivity
We document two changes in post-war 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 effort to illustrate the mechanisms underlying our explanation. We show that our model qualitatively and quantitatively matches the observed changes in business cycle dynamics.
Published (January 2021): The Economic Journal, 131(633), pp.302–326, https://doi.org/10.1093/ej/ueaa065
All data refer to the US over the postwar period and are obtained from publicly available sources, see the paper for details.
· Stata code used to construct this dataset from original data sources
· Stata code to calculate business cycle statistics (with standard errors)
· Matlab code to produced the simulated moments
· Dynare mod-file with the model definition
If you have any questions about these data or programs, please email me.