Research Paper Series
Warwick Economics Working Research Series
Our Working Papers series feature new ideas and research from academics within the Department of Economics.
The vast majority of papers are available online, the early of which is from 1975. If a paper is unavailable online, hard copies can be requested free of charge.
If you wish to obtain a copy, please contact Helen Knight, quoting the Research Paper number.
View our archive of papers on RePec; the largest freely-available online database dedicated to Economics.
||We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity vanished, (ii) the relative volatility of employment
rose, and (iii) the relative (and absolute) volatility of the real wage rose. We propose an explanation for all three changes that is based on a common source: the decline in labor market turnover, which reduced hiring frictions. We develop a simple model with hiring frictions, variable e§ort, and endogenous wage rigidities to illustrate the mechanisms underlying our explanation. We show that the decline
in turnover may also have contributed to the observed decline in output volatility. [read more]