Aggregate hours worked in OECD countries: New measurement and implications for business cycles

We build a dataset of quarterly hours worked for 14 OECD countries. We document that hours are as volatile as output, that a large fraction of labor adjustment takes place along the intensive margin, and that the volatility of hours relative to output has increased over time. We use these data to reassess the Great Recession and prior recessions. The Great Recession in many countries is a puzzle in that labor wedges are small, while those in the U.S. Great Recession – and those in previous European recessions – are much larger. ► We build a new quarterly dataset of aggregate hours worked for OECD countries. ► Volatility of total hours relative to output volatility has increased over time. ► A large fraction of labor adjustment takes place along the intensive margin. ► Productivity and labor wedges during the Great Recession are a significant puzzle.