In this dissertation I focus on the topic of jobless recovery, which explores the speed of recovery in unemployment rates post-recession, controlling for GDP growth. Chapter one furthers the empirical studies on the time series properties of the United States unemployment rate. Using vector auto regression models and controlling for changes in GDP, the unemployment rate and changes in the unemployment rate, I find structural breaks in 1959 and 1984 indicating that following a recession, the rate of decrease in the unemployment rate significantly slowed over time. Chapter one substantiates the phenomenon of jobless recovery in the United States and uses the timing of the structural breaks to review the possible causes and related theory, including industry composition, participation rates, entitlements and labor laws. Chapter two uses a representative, forward looking firm in capital and labor decisions to introduce separation costs into a discrete, dynamic, efficiency wage model in order to determine the effect of separation costs on both steady state unemployment rates and the hiring process following a negative productivity shock. I find higher separation costs cause higher steady states rates of unemployment and sclerosis of labor dynamics both in separations and hires following a recession. These findings provide a better understanding of the dynamics of post recession unemployment rates and show how firing costs may contribute to jobless recovery. In Chapter three, I study the effects on jobless recovery of diminishing the power of an employer to fire an employee through Employment-At-Will Exceptions (EWEs). I do so by using a dynamic panel with quarterly data ranging from 1976 to 2010 for the 50 states in the United States. I test both changes in state unemployment rates and state-weighted GDP growth in single variable regressions and VAR regressions. My contribution to the literature is threefold. First, I show two of the three EWEs contribute significantly to jobless recovery in the U.S. Second, I lend support to the predictions of theory that increased firing costs decrease the rate of hiring during recoveries. Third, I resolve differences in the various sources documenting the three types of EWEs in different states.

The behavior of several important macroeconomic variables has changed dramatically over the past several business cycles in the U.S. These changes, which began around the mid-1980s, have been viewed as somewhat puzzling given the stark contrast they exhibit to earlier post-war data. The movement of output and employment has historically been highly correlated throughout the different phases of the business cycle. However, this changed with the economic recovery of 1991. Since then, periods of output recovery have been accompanied by periods of prolonged job loss. These periods have come to be known as "jobless recoveries". Several competing explanations for this phenomenon have come forth, however, all face similar limitations. To date, there has been no method presented to quantify a period of jobless recovery. This makes comparisons across business cycles difficult and also prevents formal statistical testing of the proposed explanations. This study creates a meaningful measure of a jobless recovery which can be used to test these hypotheses. Furthermore, jobless recoveries have only been studied using the national aggregate data. This neglects potentially valuable information which may exist in the cross-section between states. Using the jobless recovery measure, a state-level empirical analysis is conducted to determine which, if any, of the existing explanations of jobless recoveries are supported by the data. It has also been noted that the growth of output has experienced dramatic changes over roughly the same period. The broad decline in the volatility of output since the mid-1980s, named the Great Moderation, has become the subject of a large literature. However, the literature has examined mostly data at the national-level. Using a proxy of quarterly output, this paper provides state-level evidence of the Great Moderation and shows that large, cross-state differences exist in the degree to which each state experiences the Great Moderation. Explanations for why the Great Moderation exists in the national data are examined to see how well they explain the observed cross-state differences in the evolution of output volatility.

My research studies how fiscal policies affect an economy and uncovers the cause behind the "Jobless Recovery."

In the area of dynamic economics, David Cass’s work has spawned a number of important lines of research, including the study of dynamic general equilibrium theory, the concept of sunspot equilibria, and general equilibrium theory when markets are incomplete. Based on these contributions, this volume contains new developments in the field, written by Cass's students and co-authors.

This volume brings together Howitt's key contributions to the development of macroeconomic theory

My dissertation contributes towards our understanding of the determinants of wage inequality and to the causes of the emergence of jobless recoveries. It consists of two chapters. The first, "Identifying Labor Market Sorting with Firm Dynamics" studies the determinants of wage inequality, which requires understanding how workers and firms match. I propose a novel strategy to identify the complementarities in production between unobserved worker and firm attributes, based on the idea that positive (negative) sorting implies that firms upgrade (downgrade) their workforce quality when they grow in size. I use German matched employer-employee data to estimate a search and matching model with worker-firm complementarities, job-to-job transitions, and firm dynamics. The relationship between changes in workforce quality and firm growth rates in the data informs the strength of complementarities in the model. Thus, this strategy bypasses the lack of identification inherent to environments with constant firm types. I find evidence of negative sorting and a significant dampening effect of worker-firm complementarities on wage inequality. Worker and firm heterogeneity, differential bargaining positions, and sorting contribute 71\%, 20\%, 32\% and -23\% to wage dispersion, respectively. Reallocating workers across firms to the first-best allocation without mismatch yields an output gain of less than one percent.\\ My second chapter, "Does the Cyclicality of Employment Depend on Trends in the Participation Rate?" studies the fact that the past three recessions were characterized by sluggish recovery of the employment to population ratio. The reasons behind these "jobless recoveries" are not well understood. Contrary to other post-WWII recessions, these "jobless recoveries" occurred during times with downward trending labor force participation rate(LFPR). I extend the directed search setup of Menzio et al. (2012) with a labor force participation decision to study whether trends in LFPR cause jobless recessions. I then show that that recoveries during times of declining LFPR look very different to recoveries during positive LFPR trend. The basic intuition is as follows: During downward trending LFPR, many low productivity workers cling on to their jobs, but once separated, it does not pay off for them to pay the search cost to re-enter the market. If the recession happens during increasing trend LFPR, then the employment recovery is helped by persons entering the labor market. Thus, I highlight that contrary to the usual approach in the literature, it is important to explicitly account for the trend of the LFPR.

While government vote buyers continue to rant and rave, scream and yell about all kinds of current politically correct or politically incorrect discrimination in the business and corporate world, these very same politicos totally ignore the real government created discrimination practiced every day, that of the inferior education provided by most public school systems throughout every city and state in America. The business of businessis business. It is also often stated that any action undertaken or performed by a corporation that does not make the maximum amount of profit for that corporation, is a crime committed against the businesss owners/stockholders. We have now had five years of a micro-managing, over-controlling federal government whos only stated goal is: To put every American business out of business, and every American worker out of work. Good Job Guys!

The behaviour of US productivity since this book was originally publishedin 1994, has added new relevance to the relationship between profits and productivity. In the long run, productivity growth determines the economic standard of living. This book is divided into three parts: the basis of the first is the empirical finding that, controlling for normal business cycle effects, productivity grows faster when profits have been low than otherwise. The second part discusses how to measure marginal cost using time series data and the third tests a basic assumption that productivity growth is exogenous to labour and capital.