We include a stock market-based measure of sectoral shocks in a small VAR to examine the role played by these shocks in explaining the behavior of the unemployment rate. Sectoral shocks explain a significant proportion of the variation in the unemployment rate - especially the long-duration...

This paper looks at the time-series behavior of the real wage relative to that of productivity. Given an exogenous, nonstationary process for productivity, we use a simple model of dynamic labor demand to show that the real wage and the marginal product of labor will be cointegrated if the...

Productivity grew noticeably faster than usual in the late 1990s, while the unemployment rate fell to levels not seen for more than three decades. This inverse relationship between the two variables also can be seen on several other occasions in the postwar period and leads one to wonder whether...