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Macroeconomic Effects of Job Reallocations: A Survey

  • GIOVANNI GALLIPOLI

    (University of British Columbia, Canada
    Becker-Friedman Institute, University of Chicago, USA
    Rimini Centre for Economic Analysis, Italy)

  • GIANLUIGI PELLONI

    (Wilfrid Laurier University, Canada
    The Johns Hopkins University, SAIS- Bologna
    Rimini Centre for Economic Analysis, Italy)

This paper appraises the literature on the macroeconomic effects of job reallocations. We overview different methodological approaches to the problem of observational equivalence of aggregate and sectoral shocks and draw two main conclusions. First, the non-directional nature of reallocation shocks holds the key to the fundamental identification problem. The second conclusion is that sectoral reallocation of labor has been responsible for no less that 1/4 and no more that 2/3 of the variance of aggregate unemployment in postwar data. This wide range indicates that the importance of labor reallocation may change over time, being larger at particular historical junctures.

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Article provided by Rimini Centre for Economic Analysis in its journal Review of Economic Analysis.

Volume (Year): 5 (2013)
Issue (Month): 2 (December)
Pages: 127-176

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Handle: RePEc:ren:journl:v:5:y:2013:i:2:p:127-176
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