Labor Market Effects of Workweek Restrictions: Evidence from the Great Depression

By Price Fishback, Chris Vickers, and Nicolas L. Ziebarth

American Economic Journal: Macroeconomics, October 2024

We study the effects of restrictions on the length of the workweek under the President's Reemployment Agreement (PRA) of July 1933 and the National Industrial Recovery Act. We construct a model in which the equilibrium without such a workweek restriction ...

Is There a Stable Relationship between Unemployment and Future Inflation?

By Terry Fitzgerald, Callum Jones, Mariano Kulish, and Juan Pablo Nicolini

American Economic Journal: Macroeconomics, October 2024

Evaluating the stability of the Phillips curve using aggregate data is challenging due to the bias that endogenous monetary policy imparts on estimated Phillips curve coefficients. We argue that regional data can be used to identify the structural relatio...

A Simple Explanation of Countercyclical Uncertainty

By Joshua Bernstein, Michael Plante, Alexander W. Richter, and Nathaniel A. Throckmorton

American Economic Journal: Macroeconomics, October 2024

This paper documents that labor search and matching frictions generate countercyclical uncertainty because the inherent nonlinearity in the flow of new matches makes employment uncertainty increasing in the number of people searching for work. Quantitativ...

Idiosyncratic Income Risk and Aggregate Fluctuations

By Davide Debortoli and Jordi Galí

American Economic Journal: Macroeconomics, October 2024

We study how the presence of idiosyncratic income risk affects aggregate fluctuations in the absence of binding borrowing constraints and/or cyclical income risk. Its impact is shown to be captured by the response of a consumption-weighted average of indi...

Automation, Bargaining Power, and Labor Market Fluctuations

By Sylvain Leduc and Zheng Liu

American Economic Journal: Macroeconomics, October 2024

We argue that the threat of automation weakens workers' bargaining power in wage negotiations, dampening wage adjustments and amplifying unemployment fluctuations. We make this argument based on a business cycle model with labor market search frictions, g...

Behavioral Macroeconomics and Macroeconomic Behavior

By George A. Akerlof

American Economic Review, June 2002

Fiscal Policy, Profits, and Investment

By Alberto Alesina, Silvia Ardagna, Roberto Perotti, and Fabio Schiantarelli

American Economic Review, June 2002

This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. We find a sizeable negative effect of public spending—and in particular of its wage component—on profits and on business investment. This result is consis...

Singles, Couples, and Their Labor Supply: Long-Run Trends and Short-Run Fluctuations

By Jonna Olsson

American Economic Journal: Macroeconomics, January 2025

Women's increased involvement in the economy has been an important change in labor markets during the past century. I show that a macroeconomic model taking into account gender and household composition in an otherwise parsimonious off-the-shelf setting c...

Estimating Hysteresis Effects

By Francesco Furlanetto, Antoine Lepetit, Ørjan Robstad, Juan Rubio-Ramírez, and Pål Ulvedal

American Economic Journal: Macroeconomics, January 2025

In this paper we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular in samples start...

From Blue- to Steel-Collar Jobs: The Decline in Employment Gaps?

By Benjamin Lerch

American Economic Journal: Macroeconomics, January 2025

I investigate how the introduction of industrial robots is shaping the demographic composition of the US labor force between 1993 and 2014. I find that robots decreased employment of men and women by 3.7 and 1.6 percentage points, contributing to the secu...

State-Dependent Government Spending Multipliers: Downward Nominal Wage Rigidity and Sources of Business Cycle Fluctuations

By Yoon Joo Jo and Sarah Zubairy

American Economic Journal: Macroeconomics, January 2025

In a New Keynesian model with downward nominal wage rigidity (DNWR), we show that government spending is more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large ...

Sticky Wages on the Layoff Margin

By Steven J. Davis and Pawel M. Krolikowski

American Economic Review, February 2025

We design and field an innovative survey of unemployment insurance (UI) recipients that yields new insights about wage stickiness on the layoff margin. A majority of UI recipients would accept pay cuts of 5–10 percent to save their jobs, and one-third w...

Local Projections

By Oscar Jorda and Alan M. Taylor

Journal of Economic Literature, March 2025

A central question in applied research is to estimate the effect of an exogenous intervention or shock on an outcome. The intervention can affect the outcome and controls on impact and over time. Moreover, there can be subsequent feedback between outcomes...

Structural Reforms and Economic Performance: The Experience of Advanced Economies

By Nauro F. Campos, Paul De Grauwe, and Yuemei Ji

Journal of Economic Literature, March 2025

This article provides a comprehensive assessment of the theoretical and empirical literature on structural reforms in advanced economies. Structural reforms matter because they entail profound and systematic changes that affect economic welfare, productiv...

Does Unemployment Risk Affect Business Cycle Dynamics?

By Sebastian Graves

American Economic Journal: Macroeconomics, April 2025

In this paper, I show that the decline in consumption during unemployment depends on both liquid and illiquid wealth; that unemployment predicts illiquid asset withdrawal, primarily when households have few liquid assets; and that increased idiosyncratic ...

Skill Remoteness and Post-layoff Labor Market Outcomes

By Claudia Macaluso

American Economic Journal: Macroeconomics, April 2025

Local skill remoteness captures the dissimilarity between the skill profiles of a worker's last job and other jobs in a local labor market. Higher skill remoteness at layoff is associated with persistently lower earnings after layoff, a higher probability...

Job Displacement and Earnings Losses: The Role of Joblessness

By Bruce Fallick, John Haltiwanger, Erika McEntarfer, and Matthew Staiger

American Economic Journal: Macroeconomics, April 2025

A large literature finds that workers displaced in mass layoffs experience persistent earnings losses. We find that the earnings penalty from job displacement is mediated by the length of the jobless spell after displacement. Workers who experience little...

The Geography of Consumption and Local Economic Shocks: The Case of the Great Recession

By Abe Dunn and Mahsa Gholizadeh

American Economic Journal: Macroeconomics, April 2025

We estimate across-county spending flows between firms and consumers for every county in the United States, providing a new consumption link that has not been studied previously. We highlight the importance of this link by estimating the effect of changes...

Severe Weather and the Macroeconomy

By Hee Soo Kim, Christian Matthes, and Toàn Phan

American Economic Journal: Macroeconomics, April 2025

We investigate the impact of severe weather shocks on the US macroeconomy over the past 60 years. Using a nonlinear vector autoregressive model, we find robust evidence of time-varying effects. While negligible at the beginning of the sample, the impact b...

Subjective Models of Workers and Managers for Macroeconomic Expectations

By Claudia Bruschi, Francesco D'Acunto, Saten Kumar, and Michael Weber

AEA Papers and Proceedings, May 2025

We propose a measure of subjective models of the macroeconomy for firms and workers. Subjective models are highly heterogeneous across agents, and their distribution is similar within the groups of firm managers and workers. At the same time, the beliefs ...