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Countercyclical labor productivity: the case of Spain

Author

Listed:
  • Francisco Borja Jalón Aymerich

    (Department of Economic Analysis, Complutense University of Madrid, Spain)

  • José A. Herce

    (Complutense University of Madrid and Analistas Financieros Internacionales (AFI). Spain)

Abstract

This paper explores the role of labor regulation over the cyclical pattern of labor productivity by analyzing the case of spain, which has gone in a few years from a strongly pro-cyclical pattern to a counter-cyclical one. a description of the mechanism underlying the counter-cyclical behavior of spanish labor productivity has thus far not been formulated. in this paper, we offer an explanation based on Oi’s 1962 model that seems to fit with the empi-rical evidence for spanish labor productivity.Our results suggest that the high rigidity in wages and the great flexibility in labor, related to temporary workers following the 1984 legislative reform, is the main cause of the countercy-clical pattern of Spanish labor productivity. Our findings are in line with previous papers highli-ghting the crucial influence of labor market institutions over the cyclical pattern.in addition, our analysis shows that the strong increase in labor productivity during contrac-tions lack the appropriate fundamentals for the long term, given that the increase spanish labor productivity is on average very weak in the long term.

Suggested Citation

  • Francisco Borja Jalón Aymerich & José A. Herce, 2020. "Countercyclical labor productivity: the case of Spain," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 43(122), pages 105-118, Mayo.
    • Handle: RePEc:cud:journl:v:43:y:2020:i:122:p:105-208
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    Cited by:

    1. Ni, Xiewen, 2023. "Natural resources and COP26 targets of developed countries: Pandemic perspective of natural resources extraction," Resources Policy, Elsevier, vol. 83(C).

    More about this item

    Keywords

    Business cycle; Labor productivity; Labor regulation; Total factor productivity; Countercyclicality;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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