Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Seefeldt says 'consumption smoothing' behavior makes long-term recovery more difficult for economically vulnerable

Seefeldt criticizes Kansas legislation restricting daily cash withdrawals from public assistance funds

Prescott says sex offender registries may increase recidivism by making offender re-assimilation impossible

Highlights

Elizabeth Bruch wins Robert Merton Prize for paper in analytic sociology

Elizabeth Bruch wins ASA award for paper in mathematical sociology

Spring 2015 PSC newletter available now

Formal demography workshop and conference at UC Berkeley, August 17-21

Next Brown Bag

PSC Brown Bags will be back fall 2015


Why does trend growth affect equilibrium employment? A new explanation of an old puzzle

Publication Abstract

Elsby, Michael W.L., and Matthew D. Shapiro. 2012. "Why does trend growth affect equilibrium employment? A new explanation of an old puzzle." American Economic Review, 102(4): 1378-1413.

That the employment rate appears to respond to changes in trend growth is an enduring macroeconomic puzzle. This paper shows that, in the presence of a return to experience, a slowdown in productivity growth raises reservation wages, thereby lowering aggregate employment. The paper develops new evidence that shows this mechanism is important for explaining the growth-employment puzzle. The combined effects of changes in aggregate wage growth and returns to experience account for all the increase from 1968 to 2006 in nonemployment among low-skilled men and for approximately half the increase in nonemployment among all men.

DOI:10.1257/aer.102.4.1378 (Full Text)

Browse | Search : All Pubs | Next