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PRODUCTIVITY AND THE LABOR MARKET: COMOVEMENT OVER THE BUSINESS CYCLE *
Author(s) -
Hagedorn Marcus,
Manovskii Iourii
Publication year - 2011
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2011.00641.x
Subject(s) - productivity , current population survey , economics , business cycle , econometrics , production (economics) , value (mathematics) , labour economics , survey data collection , population , microeconomics , macroeconomics , statistics , mathematics , demography , sociology
The productivity‐driven Mortensen–Pissarides model predicts that labor productivity is strongly correlated with labor market variables whereas these correlations were argued to be much weaker in the data, especially since the 1980s. We first document that the size of these discrepancies between the data and the model becomes substantially smaller if employment data from the Current Population Survey is used in measuring productivity instead of the commonly used employment data from the Current Employment Statistics. Second, we show that incorporating time to build and a stochastic value of home production helps reconcile the quantitative performance of the model with the data.