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Interpreting procyclical productivity: evidence from a cross-nation cross-industry panel

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  • J. Bradford DeLong
  • Robert J. Waldmann

Abstract

We use an international panel data set of value added by industry to see if labor productivity is procyclical in response to demand shocks. It is: holding fixed our proxy for supply-side factors - the value added levels of an industry in other nations - industry-level productivity rises when value added in the rest of manufacturing rises. Moreover, increases in unemployment are associated with a lowered degree of procyclicality in Europe. This suggests that procyclical productivity arises primarily from \"labor hoarding\" by firms in the U.S. that wish to avoid future training costs and primarily from \"job hoarding\" by workers in Europe who wish to avoid unemployment.

Suggested Citation

  • J. Bradford DeLong & Robert J. Waldmann, 1997. "Interpreting procyclical productivity: evidence from a cross-nation cross-industry panel," Economic Review, Federal Reserve Bank of San Francisco, pages 33-52.
    • Handle: RePEc:fip:fedfer:y:1997:p:33-52:n:1
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    References listed on IDEAS

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    1. Cyclical vs Structural Unemployment part N
      by Robert in angry bear on 2010-09-02 04:59:00
    2. Robert Waldmann Predicts a Jobless Recovery too...
      by Brad DeLong in Grasping Reality with the Invisible Hand on 2009-07-23 06:33:00

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    Cited by:

    1. Claudiu George BOCEAN, 2012. "Human Resource Compensation In Time Of Crisis," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(2), pages 285-292, November.
    2. Ahn, JaeBin & Choi, Moon Jung, 2020. "From firm-level imports to aggregate productivity: Evidence from Korean manufacturing firm data," Japan and the World Economy, Elsevier, vol. 56(C).
    3. Nicoletta Batini & Brian Jackson & Stephen Nickell, 2002. "The Pricing Behaviour of UK Firms," Discussion Papers 09, Monetary Policy Committee Unit, Bank of England.
    4. Gianluigi Nocella, 2015. "Competitività e distribuzione funzionale nell'Eurozona," a/ Working Papers Series 1504, Italian Association for the Study of Economic Asymmetries, Rome (Italy).

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    Keywords

    Labor productivity; Unemployment;

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