Countercyclical labor productivity: the case of Spain

Francisco Borja Jalón Aymerich and José Herce ()
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Francisco Borja Jalón Aymerich: Department of Economic Analysis, Complutense University of Madrid, Spain

Cuadernos de Economía - Spanish Journal of Economics and Finance, 2020, vol. 43, issue 122, 105-118

Abstract: This paper explores the role of labor regulation over the cyclical pattern of labor productivity by analyzing the case of spain, which has gone in a few years from a strongly pro-cyclical pattern to a counter-cyclical one. a description of the mechanism underlying the counter-cyclical behavior of spanish labor productivity has thus far not been formulated. in this paper, we offer an explanation based on Oi’s 1962 model that seems to fit with the empi-rical evidence for spanish labor productivity.Our results suggest that the high rigidity in wages and the great flexibility in labor, related to temporary workers following the 1984 legislative reform, is the main cause of the countercy-clical pattern of Spanish labor productivity. Our findings are in line with previous papers highli-ghting the crucial influence of labor market institutions over the cyclical pattern.in addition, our analysis shows that the strong increase in labor productivity during contrac-tions lack the appropriate fundamentals for the long term, given that the increase spanish labor productivity is on average very weak in the long term.

Keywords: Business cycle; Labor productivity; Labor regulation; Total factor productivity; Countercyclicality (search for similar items in EconPapers)
JEL-codes: D22 D24 E24 E32 J24 J32 O47 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cud:journl:v:43:y:2020:i:122:p:105-208

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