Dossche, Maarten; Gazzani, Andrea; Lewis, Vivien - 2021
Labor productivity is more procyclical in OECD countries with lower employment volatility. To capture this new stylized … fact, we propose a business cycle model with employment adjustment costs, variable hours and labor effort. We show that, in … as stable employment. In contrast, the constant-effort model fails to replicate the observed cross-country pattern in the …
