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How Biased Are Measures Of Cyclical Movements In Productivity And Hours?

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  • Stephanie Aaronson
  • Andrew Figura

Abstract

The movement of hours worked over the business cycle is an important input into the estimation of many key parameters in macroeconomics. Unfortunately, the available data on hours do not correspond precisely to the concept required for accurate inference. We study one source of mismeasurement—that the most commonly used source data measure hours paid instead of hours worked. In particular, we focus our attention on salaried workers, a group for whom the gap between hours paid and hours worked is likely to be large. We show that the measurement gap varies significantly and positively with changes in labor demand. As a result, we estimate that the standard deviations of the workweek and of total hours worked are 27 and 5 percent larger, respectively, than published measures of hours suggest. We also find that this measurement gap is unlikely to be the source of the acceleration in published measures of productivity in the early 2000s.

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  • Stephanie Aaronson & Andrew Figura, 2010. "How Biased Are Measures Of Cyclical Movements In Productivity And Hours?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 539-558, September.
    • Handle: RePEc:bla:revinw:v:56:y:2010:i:3:p:539-558
    DOI: 10.1111/j.1475-4991.2010.00401.x
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    References listed on IDEAS

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    Cited by:

    1. Andrew S. Green, 2017. "Hours Off the Clock," Working Papers 17-44, Center for Economic Studies, U.S. Census Bureau.
    2. Messinis, George, 2013. "Returns to education and urban-migrant wage differentials in China: IV quantile treatment effects," China Economic Review, Elsevier, vol. 26(C), pages 39-55.
    3. Peter J. Dolton & Michael P. Kidd & Jonas Fooken, 2015. "Get a Life? The Impact of the European Working Time Directive: The Case of UK Senior Doctors," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1272-1288, October.
    4. Jay Stewart & Harley Frazis, 2019. "The importance and challenges of measuring work hours," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-95, July.

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