Effects of productivity shocks on hours worked: UK evidence
Hashmat Khan () and
John Tsoukalas
The B.E. Journal of Macroeconomics, 2013, vol. 13, issue 1, 549-579
Abstract:
We provide evidence that positive industry-level productivity shocks cause hours worked to fall in the short run in the UK economy. We use UK industry data, which covers both manufacturing and non-manufacturing industries, and identify productivity shocks using long-run restrictions and structural vector autoregression methodology. Our findings show that the unconditional correlation between growth rates of productivity and hours is negative in almost all the industries, and the correlation conditional on productivity shocks is negative in over three-quarters of the industries. After a positive productivity shock, hours fall in 26 of the 31 industries. The findings at the aggregate level are consistent with those at industry level. We note some striking differences in comparison to the recent US literature. Significantly larger capital adjustment costs in the UK help account for the UK-US differences. Moreover, UK industries with higher investment elasticities (lower capital adjustment costs) have less negative impact effects of hours.
Keywords: business cycles, hours, productivity shocks, JEL Classification: E32; E24 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://doi.org/10.1515/bejm-2012-0056 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:13:y:2013:i:1:p:31:n:5
Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejm/html
DOI: 10.1515/bejm-2012-0056
Access Statistics for this article
The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti
More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().