10.17889/E109604V1
Elsby, Michael W. L.
Shapiro, Matthew D.
Replication data for: Why Does Trend Growth Affect Equilibrium Employment? A New Explanation of an Old Puzzle
ICPSR Inter-university Consortium for Political and Social Research
2012
10.1257/aer.102.4.1378
10.1257/aer.102.4.1378
1
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. (JEL E24, J24, J31)