Labor Supply Factors and Economic Fluctuations

Foroni, Claudia; Furlanetto, Francesco

doi:10.1111/iere.12311

Cited by 53 publications

(55 citation statements)

References 63 publications

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“…The wage bargaining shock is defined as a shock that generates countercyclical dynamics in real wages and in the participation rate. These restrictions find strong theoretical support in a New Keynesian model with search and matching frictions and endogenous labor force participation, as discussed in Foroni, Furlanetto and Lepetit (2015), but also in the model of unemployment proposed by Galí, Smets and Wouters (2011). Notice that, as already mentioned in the Introduction, Norway is the ideal laboratory to study wage bargaining shocks given its highly centralized system of wage negotiation.…”

Section: Introductionmentioning

confidence: 53%

“…Our main results are confirmed in that extended set-up for which the estimation is more computationally intensive. 5 An important role for labor supply factors in VAR models estimated on US data has been found by Shapiro and Watson (1988), Chang and Schorfheide (2003) and Foroni, Furlanetto and Lepetit (2015). Those shocks are supposed to capture mainly demographic factors, but alternative interpretations have been discussed recently in the literature (cf.…”

Section: Baseline Modelmentioning

confidence: 99%

“…Our assumption finds theoretical support in recent macroeconomic models (cf. Galí, Smets andWouters, 2011, andForoni, Furlanetto andLepetit, 2015) and empirical support in studies investigating the impact of immigration in Norway (cf. Raaum, 2012, andBratsberg, Raaum, Røed andSchøne, 2014).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Immigration and the macroeconomy: Some new empirical evidence

Furlanetto¹,

Robstad²

2019

Review of Economic Dynamics

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We propose a new VAR identifi cation scheme that enables us to disentangle immigration shocks from other macroeconomic shocks. Identifi cation is achieved by imposing sign restrictions on Norwegian data over the period 1990Q1 -2014Q2. The availability of a quarterly series for net immigration is crucial to achieving identifi cation. Notably, immigration is an endogenous variable in the model and can respond to the state of the economy. We fi nd that domestic labour supply shocks and immigration shocks are well identifi ed and are the dominant drivers of immigration dynamics. An exogenous immigration shock lowers unemployment (even among native workers), has a small positive effect on prices and on public fi nances, no impact on house prices and household credit, and a negative effect on productivity.JEL classifi cation: C11, C32, E32. ResumenProponemos un nuevo esquema de identifi cación VAR que nos permite separar perturbaciones migratorias de otras perturbaciones macroeconómicas. La identifi cación se logra imponiendo restricciones de signo a datos noruegos para el período I TR 1990-II TR 2014. La disponibilidad de series trimestrales para la inmigración neta es crucial para lograr identifi cación. En particular, la inmigración es una variable endógena en el modelo y puede responder al estado de la economía. Encontramos que las perturbaciones de oferta de mano de obra doméstica y las perturbaciones migratorias están bien identifi cadas y son los principales impulsores de la dinámica migratoria. Una perturbación exógena de inmigración reduce el desempleo (incluso entre los trabajadores nativos), tiene un pequeño efecto positivo sobre los precios y sobre las fi nanzas públicas, no afecta a los precios de la vivienda ni al crédito de los hogares y tiene un efecto negativo sobre la productividad.Palabras clave: perturbaciones de oferta de trabajo, perturbaciones de inmigración, inmigración laboral, identifi cación, VAR.

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Section: Introductionmentioning

confidence: 53%

Section: Baseline Modelmentioning

confidence: 99%

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Immigration and the macroeconomy: Some new empirical evidence

Furlanetto¹,

Robstad²

2019

Review of Economic Dynamics

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“…These changes correspond in the data with innovations in labor law, judicial decisions, and, more generally, the social climate regarding collective bargaining. Also, shocks to the minimum wage and unemployment benefits are, to first order, equivalent to bargaining power shocks (Foroni et al, 2017). As we will see, the steady-state capital income is mostly pinned down by deep parameters other than the bargaining power.…”

Section: Modelmentioning

confidence: 82%

“…Ravenna and Walsh (2011) relate bargaining shocks to the design of optimal monetary policy. Foroni et al (2017) have presented VAR evidence of the importance of bargaining supply shocks in employment fluctuations. Ríos-Rull and Santaeulàlia-Llopis (2010) interpret redistribution shocks as technological shocks to the production function.…”

Section: Introductionmentioning

confidence: 99%

Bargaining Shocks and Aggregate Fluctuations

Drautzburg¹,

Fernández-Villaverde²,

Guerrón‐Quintana³

2020

Working Paper (Federal Reserve Bank of Philadelphia)

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We argue that social and political risk causes significant aggregate fluctuations by changing bargaining power. To that end, we document significant changes in the capital share after large political events, such as political realignments, modifications in collective bargaining rules, or the end of dictatorships, in a sample of developed and emerging economies. These policy changes are associated with significant fluctuations in output. Using a Bayesian proxy-VAR estimated with U.S. data, we show how distribution shocks cause movements in output and unemployment. To quantify the importance of these political shocks for the U.S. as a whole, we extend an otherwise standard neoclassical growth model. We model political shocks as exogenous changes in the bargaining power of workers in a labor market with search and matching. We calibrate the model to the U.S. corporate non-financial business sector and we back out the evolution of the bargaining power of workers over time using a new methodological approach, the partial filter. We show how the estimated shocks agree with the historical narrative evidence. We document that bargaining shocks account for 28% of aggregate fluctuations and have a welfare cost of 2.4% in consumption units.

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Cyclical dynamics and the gender pay gap: A structural VAR approach

Kovalenko

Töpfer

2021

Economic Modelling

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Labor Supply Factors and Economic Fluctuations

Cited by 53 publications

References 63 publications

Immigration and the macroeconomy: Some new empirical evidence

Immigration and the macroeconomy: Some new empirical evidence

Bargaining Shocks and Aggregate Fluctuations

Cyclical dynamics and the gender pay gap: A structural VAR approach

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