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Labor Productivity: Structural Change and Cyclical Dynamics

Martin Neil Baily, Eric Bartelsman () and John Haltiwanger

No 5503, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A longstanding puzzle of empirical economics is that average labor productivity declines during recessions and increases during booms. This paper provides a framework to assess the empirical importance of competing hypotheses for explaining the observed procyclicality. For each competing hypothesis we derive the implications for cyclical productivity conditional on expectations of future demand and supply conditions. The novelty of the paper is that we exploit the tremendous heterogeneity in long-run structural changes across individual plants to identify the short-run sources of procyclical productivity. Our findings favor an adjustment cost model which involves a productivity penalty for downsizing as the largest source of procyclical labor productivity.

Date: 1996-03
Note: EFG
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Published as Baily, Martin Neil, Eric J. Bartelsman and John Haltiwanger. "Labor Productivity: Structural Change And The Cyclical Dynamics," Review of Economics and Statistics, 2001, v83(3,Aug), 420-433.

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Related works:
Journal Article: Labor Productivity: Structural Change And Cyclical Dynamics (2001) Downloads
Working Paper: Labor Productivity: Structural Change and Cyclical Dynamics (1998) Downloads
Working Paper: Labor productivity: structural change and cyclical dynamics (1996) Downloads
Working Paper: Labor productivity: structural change and cyclical dynamics (1995) Downloads
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