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

PSC In The News

RSS Feed icon

Stephenson assessing in-home HIV testing and counseling for male couples

Thompson says mass incarceration causes collapse of Detroit neighborhoods

Liberal-conservative gap by education level growing in U.S.

Highlights

Maggie Levenstein named director of ISR's Inter-university Consortium for Political and Social Research

Arline Geronimus receives 2016 Harold R. Johnson Diversity Service Award

PSC spring 2016 newsletter: Kristin Seefeldt, Brady West, newly funded projects, ISR Runs for Bob, and more

AAUP reports on faculty compensation by category, affiliation, and academic rank

Next Brown Bag

PSC Brown Bags
will resume fall 2016

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