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Explaining Industry Labor Productivity Movements

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  • Feasel, Edward M

Abstract

This paper investigates the importance of three shocks at the industry level for explaining industry labor productivity movements: industry demand shocks, supply shocks, and labor supply shocks. The results from vector autoregressions show that the two supply shocks are the main determinants of labor productivity movements, where increases in labor supply are associated with persistently declining labor productivity. Labor supply shocks can explain from 65 percent to 73 percent of labor productivity variation at a three-year horizon in the trade and services industries. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Feasel, Edward M, 1998. "Explaining Industry Labor Productivity Movements," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 654-669, October.
    • Handle: RePEc:oup:ecinqu:v:36:y:1998:i:4:p:654-69
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