Skill Heterogeneity and the Business Cycle
This paper extends the real business cycle framework to incorporate ex ante skill heterogeneity among workers. Consistent with the empirical evidence, skilled and unskilled workers in the model face the same degree of cyclical variation in real wages, although unskilled workers are subject to substantially higher procyclical variation in employment. Systematic cyclical changes in the average skill level of employed workers are shown to induce bias in standard aggregate measures of cyclical variation in the labour input, productivity, and the real wage. The introduction of skill heterogeneity improves the model's ability to match the empirical correlation between total hours and the real wage, but the correlation between total hours and labour productivity remains higher than it does in the data.
Volume (Year): 29 (1996)
Issue (Month): 4 (November)
|Contact details of provider:|| Postal: |
Web page: http://economics.ca/cje/
More information through EDIRC
|Order Information:|| Web: http://economics.ca/en/membership.php Email: |
When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:29:y:1996:i:4:p:910-29. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler)
If references are entirely missing, you can add them using this form.