The Vanishing Procyclicality of Labour Productivity

Jordi Galí and Thijs van Rens



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,

January 2019 [download pdf] – Earlier version (January 2014) also available as CEPR Discussion Paper 9853

Online appendices

Previous versions: April 2017 (appendices), September 2008, October 2009, July 2010 (also available as IZA Discussion Paper 5099), and January 2014
First version: August 2008



All data refer to the US over the postwar period and are obtained from publicly available sources, see the paper for details.

·       Dataset in Stata format and comma-separated format

·       Stata code used to construct this dataset from original data sources

·       Stata code to calculate business cycle statistics (with standard errors)




We used Dynare version 4.0.3 for Matlab to simulate a second order approximation of the model.

·        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.

Thijs van Rens  |  IDEAS/RePEc  |  Google Scholar  |  ResearchGate