Date: 2007
Type: Working Paper
Labor Market Dynamics and the Business Cycle: Structural Evidence for the United States
Working Paper, EUI ECO, 2007/13
RAVN, Morten O., SIMONELLI, Saverio, Labor Market Dynamics and the Business Cycle: Structural Evidence for the United States, EUI ECO, 2007/13 - https://hdl.handle.net/1814/6977
Retrieved from Cadmus, EUI Research Repository
We use a 12-dimensional VAR to examine the dynamic effects on the labor market of four struc-
tural technology and policy shocks. For each shock, we examine the dynamic effects on the labor
market, the importance of the shock for labor market volatility, and the comovement between labor
market variables and other key aggregate variables in response to the shock. We document that labor
market indicators display \hump-shaped" responses to the identified shocks. Technology shocks and
monetary policy shocks are important for labor market volatility but the ranking of their importance
is sensitive to the VAR specification. The conditional correlations at business cycle frequencies are
similar in response to the four shocks apart from the correlations between hours worked, labor productivity and real wages. To account for the unconditional correlations between these variables, a
mixture of shocks are required.
Cadmus permanent link: https://hdl.handle.net/1814/6977
ISSN: 1725-6704
Series/Number: EUI ECO; 2007/13
Publisher: European University Institute
Keyword(s): C32 E24 E32 E52 E62 Structural VAR Labor market dynamics The Beveridge curve