Galí, Jordi; van Rens, Thijs - Institute for the Study of Labor (IZA) - 2010
We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity has … wage has risen. We propose an explanation for all three changes that is based on a common source: a decline in labor market … frictions. We develop a simple model with labor market frictions, variable effort, and endogenous wage rigidities to illustrate …