productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively … less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model … mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995. …

We identify measures of shocks to total factor productivity and preferences from two real business cycle models and … measures. Our findings contrast with similar studies for other countries that question the exogeneity of either productivity or …