Danilo Cascaldi-Garcia and Camilo Morales-JiménezU.S. employment growth slowed down notably in the second part of 2025, and a key question is how much of the weakness stems from labor demand and how much from labor...
Overview
FEDS Note: Model Perspectives on Supply and Demand Factors behind a Soft Labor Market. Danilo Cascaldi-Garcia and Camilo Morales-JiménezU.S. employment growth slowed down notably in the second part of 2025, and a key question is how much of the weakness stems from labor demand and how much from labor supply. In this note, we examine this question from the point of view of two different models: a statistical model that uses an intuitive interpretation of the joint behavior of employment and wage growth to infer the effects of labor supply and demand (VAR), and a structural dynamic
