Advanced Search
MyIDEAS: Login

Productivity or Employment: Is It a Choice?

Contents:

Author Info

  • Andrea De Michelis

    ()

  • Marcello Estevão

    ()

  • Beth Anne Wilson

    ()

Abstract

Traditionally, shocks to total factor productivity (TFP) are considered exogenous and the response of employment is determined by their effect on aggregate demand. We approach the relationship between TFP and labour input differently, raising the possibility that in response to labour supply shocks firms adjust production efficiency. TFP would, thus, be endogenous to firms’ production decisions. We present cross-country evidence of a strong negative correlation between growth in TFP and labour inputs over the medium to long run. This result is robust to changing datasets, sample periods, and industry composition. To address the question of causality, we use instruments to capture changes in hours worked that are independent of TFP movements and find that TFP growth falls (increases) following a pickup (decline) in hours growth. These results have important policy implications.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.csls.ca/ipm/25/IPM-25-Michelis-Estevao-Wilson.pdf
Download Restriction: no

Bibliographic Info

Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 25 (2013)
Issue (Month): (Spring)
Pages: 41-60

as in new window
Handle: RePEc:sls:ipmsls:v:25:y:2013:5

Contact details of provider:
Postal: 151 Slater Street, Suite 710, Ottawa, ON K1P 5H3
Phone: 613-233-8891
Fax: 613-233-8250
Email:
Web page: http://www.csls.ca/
More information through EDIRC

Order Information:
Email:
Web: http://www.csls.ca

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ohanian, Lee & Raffo, Andrea & Rogerson, Richard, 2008. "Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956-2004," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1353-1362, November.
  2. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 67-124 National Bureau of Economic Research, Inc.
  3. Ian Dew-Becker & Robert J. Gordon, 2012. "The Role of Labor-Market Changes in the Slowdown of European Productivity," Review of Economics and Institutions, Università di Perugia, vol. 3(2).
  4. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  5. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
  6. Paul Beaudry & Fabrice Collard & David A. Green, 2005. "Explaining Productivity Growth: The Role of Demographics," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 45-58, Spring.
  7. Dale W. Jorgenson, 2012. "The World KLEMS Initiative," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 5-19, Fall.
  8. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
  9. Holmes, Thomas J. & Jr., James A. Schmitz, 2001. "A gain from trade: From unproductive to productive entrepreneurship," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 417-446, April.
  10. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages F374-F403, 06.
  11. Susanto Basu, 1995. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," NBER Working Papers 5336, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The Federal Reserve: Looking Back, Looking Forward
    by Guest Author in The Big Picture on 2014-01-04 10:00:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Oberhofer, Harald & Vincelette, Gallina A, 2013. "Determinants of job creation in eleven new EU member states : evidence from firm level data," Policy Research Working Paper Series 6533, The World Bank.
  2. Bernanke, Ben S., 2014. "The Federal Reserve: Looking Back, Looking Forward : a speech at the Annual Meeting of the American Economic Association, Philadelphia, Pennsylvania, January 3, 2014," Speech 608, Board of Governors of the Federal Reserve System (U.S.).
  3. Barbara M. Fraumeni, 2013. "Comments on "Productivity or Employment: Is It a Choice?"," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 61-64, Spring.
  4. Crespo Cuaresma, Jesus & Oberhofer, Harald & Vincelette, Gallina A., 2014. "Institutional Barriers and Job Creation in Central and Eastern Europe," Working Papers in Economics and Finance 2014-1, University of Salzburg.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:sls:ipmsls:v:25:y:2013:5. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Whitney Hamilton) The email address of this maintainer does not seem to be valid anymore. Please ask Whitney Hamilton to update the entry or send us the correct address.

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.