The Labor Wedge: MRS vs. MPN

Karabarbounis, Loukas

doi:10.3386/w19015

Cited by 26 publications

(58 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…As discussed in Section 2, these effects of higher labor migration are similar to the effects in Topel (1986), Bhaskar et al (2002), Blanchard and Katz (1992), and Beaudry et al (2014). The effects also explain the countercyclicality of wage markups that Karabarbounis (2014) finds (see Footnote 2).…”

Section: Posterior Distributionsupporting

confidence: 54%

“…15 Without the mobility-wage channel, housing market shocks cannot explain the recession since the real wage in the impatient household becomes too low, leaving labor demand to be too high. The prevalence of large positive wage markups during and after the Great Recession has previously been noted by Karabarbounis (2014) using a different identification strategy. He finds that the cyclical component of the average wage markup increased by approx.…”

Section: Housing Market Shocks and The Great Recessionmentioning

confidence: 81%

“…2 The countercyclicality of wage markups has been documented by Karabarbounis (2014). He decomposes the labor wedge into price and wage markups, and shows that the wage markup had a −62 pct.…”

Section: Introductionmentioning

confidence: 99%

“…14 pct., according to Karabarbounis (2014). The mobility-wage channel thus constitutes 1 For instance, Molloy et al (2011) document the decline in geographical mobility, but then find that compositional changes in the U.S. population cannot explain it.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

House Prices, Geographical Mobility, and Unemployment

Ingholt¹

2017

SSRN Journal

View full text Add to dashboard Cite

Geographical mobility correlates positively with house prices and negatively with unemployment over the U.S. business cycle. I present a DSGE model in which declining house prices and tight credit conditions impede the mobility of indebted workers. This reduces the workers' cross-area competition for jobs, causing wages and unemployment to rise. A Bayesian estimation shows that this channel more than quadruples the response of unemployment to adverse housing market shocks. The estimation also shows that adverse housing market shocks caused the decline in mobility during the Great Recession. Absent this decline, the unemployment rate would have been 0.5 p.p. lower.JEL classification: D58, E24, E32, E44, R21, R23.

show abstract

Section: Posterior Distributionsupporting

confidence: 54%

Section: Housing Market Shocks and The Great Recessionmentioning

confidence: 81%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

House Prices, Geographical Mobility, and Unemployment

Ingholt¹

2017

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…The capital wedge, measured as in Hall (2015), in the new stochastic steady state (i.e. underĝ 2009 ), is 1% higher than the 2007 one, while the implicit tax on labor, under the assumptions in Karabarbounis (2014) 24 goes up by 12 % (an increase of one-third relative to 2007-levels).…”

Section: Resultsmentioning

confidence: 99%

The Tail that Wags the Economy: Belief-Driven Business Cycles and Persistent Stagnation

2015

View full text Add to dashboard Cite

The "Great Recession" was a deep downturn with long-lasting effects on credit markets, labor markets and output. We explore a simple explanation: This recession has been more persistent than others because it was perceived as an extremely unlikely event before2007. Observing such an episode led all agents to re-assess macro risk, in particular, the probability of tail events. Since changes in beliefs endure long after the event itself has passed and through its effects on prices and choices, it produces long-lasting effects on investment, employment and output. To model this idea, we study a production economy with agents who use standard econometric tools to estimate the distribution of aggregate shocks. When they observe a new shock, they re-estimate the distribution from which it was drawn. Even transitory shocks have persistent effects because, once observed, they stay forever in the agents' data set. We feed a time-series of US macro data into our model and show that our belief revision mechanism can explain the 12% downward shift in US trend output.JEL Classifications: D84, E32

show abstract

Data for estimating the U.S. labor wedge

Zhang¹

2018

Data in Brief

View full text Add to dashboard Cite

The after-tax labor wedge is defined as the log difference between the MRS and the MPL excluding taxes. This article introduces the data and approach that are used to estimate the U.S. after-tax labor wedge to provide empirical support for the research article entitled "Credit Crunch, Heterogeneity and the Labor Wedge" (Zhang, 2018 (Forthcoming)) [4]. I measure the U.S. after-tax labor wedge and then decompose it into the sum of the gap between the MPL and the real wage (the MPL component) and the gap between the real wage and the MRS (the MRS component). The after-tax labor wedge and its decomposition are measured using quarterly data from 1947Q1 to 2017Q3.

show abstract

The Labor Wedge: MRS vs. MPN

Cited by 26 publications

References 18 publications

House Prices, Geographical Mobility, and Unemployment

House Prices, Geographical Mobility, and Unemployment

The Tail that Wags the Economy: Belief-Driven Business Cycles and Persistent Stagnation

Data for estimating the U.S. labor wedge

Contact Info

Product

Resources

About