Labor Hoarding, Inflexible Prices, and Procyclical Productivity

Julio Rotemberg and Lawrence H. Summers

No 2591, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Hall has pointed out that, when there is perfect competition and price flexibility, labor hoarding alone will not induce the Solow residual measured using labor's share in revenues to be procyclical. We show that, even with perfect competition, a small amount of price rigidity - we assume firms must set price slightly before the level of demand becomes known - makes the extent of procyclical productivity depend mainly on the extent of labor hoarding. We show that indeed, whether productivity is measured via the Solow method using labor's share in revenues or using other methods, it tends to be more procyclical in industries and in nations where labor hoarding is more important

Date: 1988-05
Note: EFG
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published as "Inflexible Prices and Procyclical Productivity", Quarterly Journal of Economics", Vol. 105, no. 4 (1990): 851-874.

Downloads: (external link)
http://www.nber.org/papers/w2591.pdf (application/pdf)

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:nbr:nberwo:2591

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2591

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().