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Countercyclical Labor Productivity: The Spanish Anomaly

Author

Listed:
  • Borja Jalón

    (University Complutense of Madrid)

  • Simón Sosvilla-Rivero

    (Complutense Institute for International Studies, Universidad Complutense de Madrid; 28223 Madrid, Spain.)

  • José A. Herce

    (University Complutense of Madrid and International Financial Analysts (AFI).)

Abstract

The cyclical pattern of labor productivity has been a subject of discussion in the economic literature for long time with important theoretical implications. Many authors point out the role of labor market institutions as determinants of the cyclical pattern. For these authors, the loss of procyclicality experimented in the United States since the mid-1980s could be explained by decrease of rigidities in labor market. Following the literature, this paper explores the role of labor regulation by analyzing the case of Spain, which has gone in a few years from a strongly procyclical pattern to a counterciclycal one. Our results suggest that the high rigidity in wages and the great flexibility in labor, related to the temporary workers after the 1984 legislative reform, is the main cause of the countercyclical pattern of the Spanish labor productivity. Our findings are in line with previous papers highlighting the crucial influence of labor market institutions over the cyclical pattern.

Suggested Citation

  • Borja Jalón & Simón Sosvilla-Rivero & José A. Herce, 2017. "Countercyclical Labor Productivity: The Spanish Anomaly," IREA Working Papers 201712, University of Barcelona, Research Institute of Applied Economics, revised Jun 2017.
    • Handle: RePEc:ira:wpaper:201712
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    References listed on IDEAS

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    3. Michael C. Burda, 2018. "Aggregate labor productivity," IZA World of Labor, Institute of Labor Economics (IZA), pages 435-435, April.

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    More about this item

    Keywords

    Business cycle; labor productivity; labor regulation; multifactor productivity. JEL classification:E32; J30; K31; O47.;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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