We decompose the underlying disturbances in total hours into three kinds: disturbances that shift the level of employment in the long run, those that change the sectoral composition of employment in the long run, and those that cause temporary movement of hours. Our identifying restriction exploits the distinctive nature of the two margins of labor: employment and hours per worker. Based on the postwar U.S. data, we find that aggregate and sectoral disturbances are roughly equally important for the cyclical fluctuations of aggregate hours.
Bibliographical noteFunding Information:
We thank Mark Bils, Bill Dupor, Frank Schorfheide, and participants at the Wharton Macro Lunch and the Econometrics Society Meeting in Seattle for suggestions and comments. Noh-Sun Kwark gratefully acknowledges the financial support of the Dongguk University Research Fund.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics