Labour Productivity and Cyclical Dynamics in the Service sector

A longstanding basis of empirical economics is that average labour productivity declines during recessions and increases during booms, behaves procyclically. In the short run, output growth and productivity tend to move together in many countries and across a wide range of industries. In ercent years this observation has gained increased prominence, as each proposed explanation for the observed procyclicality has important implications for economic growth. The aim of this paper is to better understand short-run changes in productivity growth within the service sector industries, necessarily different from the ones existing within manufacturing sector. Another goals of this research are to assess if this observed procyclicality remains if service sector is the scope of analysis, and if this fact is homogeneous among different activities within this miscenllaneous sector or not. Empirical evidence for Spanish economy is presented.