Standard models suggest that adverse labor demand shocks will lead to bigger employment losses if institutional factors … explains the contrast between the United States, where real wages fell over the 1980s and aggregate employment expanded … vigorously, and Europe, where real wages were (roughly) constant and employment was stagnant. We test this hypothesis by …

largely above its pre-recession level. We find two main explanations for these differences. First, the large employment swings … consistent with a conventional Okun relationship linking GDP growth to employment performance. In particular, relative to pre …