The cost of benefits, financial conditions, and employment dynamics in recent U.S. Recoveries

Arbeitspapier

This paper explores how much firm-paid employee benefits and firms' financial conditions have contributed to delayed employment recoveries relative to output since 1990, using a DSGE model. Empirically, I document the underexplored pro-cyclicality of per worker benefit costs. Post-1990 period differs from before in that: (1) there have been larger increases of such quasi-fixed employment costs at recoveries; (2) tight financial conditions have also persisted longer into recent recoveries. The model generates 3-to-7-quarter delays in employment recoveries for the post-1990 period but no delay for before, consistent with data; and it produces more than 76 percent of employment volatility.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 717

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Compensation Packages; Payment Methods ; Labor Force and Employment, Size, and Structure ; Computable General Equilibrium Models ; Optimization Techniques; Programming Models; Dynamic Analysis
• Subject: Employment recoveries ; benefit costs ; extensive and intensive margins ; financial conditions ; enforcement constraint ; DSGE model ; business cycle ; dynamic programming

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gu, Grace Weishi
• Event: Veröffentlichung
• (who): University of California, Economics Department
• (where): Santa Cruz, CA
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/98635
• Last update: 10.03.2025, 11:42 AM CET