01831cas a2200241 a 4500 AALejournalIMF007334 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451854435 1018-5941 BD-DhAAL BD-DhAAL Prasad, Eswar. Skill Heterogeneity and Aggregation Bias Over the Business Cycle / Eswar Prasad. Washington, D.C. : International Monetary Fund, 1995. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper extends the equilibrium business cycle framework to incorporate ex ante skill heterogeneity among workers. Consistent with the empirical evidence, skilled and unskilled workers in the model face the same degree of cyclical variation in real wages although unskilled workers are subject to substantially higher procyclical variation in employment. Systematic cyclical changes in the average skill level of employed workers are shown to induce bias in aggregate measures of cyclical variation in the labor input, productivity, and the real wage. The introduction of skill heterogeneity improves the model's ability to match the empirical correlation between total hours and the real wage but the correlation between total hours and labor productivity remains higher than in the data. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1995/122 Full text available on IMF http://elibrary.imf.org/view/journals/001/1995/122/001.1995.issue-122-en.xml IMF e-Library