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The "End-of-Expansion" Phenomenon in Short-Run Productivity Behavior

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  • Robert J. Gordon

    (Northwestern University and National Bureau of Economic Research)

Abstract

This paper makes no contribution to an understanding of the secular slowdown in productivity, except to add a new cyclical correction of the long-run trend. Its main objective is to examine the short-run behavior of aggregate labor productivity in isolation. In addition to the phenomenon of short-run "increasing returns to labor" identified in previous studies, it isolates an often overlooked but consistent tendency for productivity to perform poorly in the last stages of a business expansion. In 1956, 1960, 1969,1973, and now again in 1979, a productivity shortfall has developed, with absolute declines in the level of productivity occurring in every episode except the first, and in every episode before 1979 the shortfall has subsequently been made up. The paper is more successful in identifying this "end-of-expansion" phenomenon than in explaining it; the results suggest that firms tend consistently to hire more workers in the last stages of a business expansion than is justified by the level of output.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Robert J. Gordon, 1979. "The "End-of-Expansion" Phenomenon in Short-Run Productivity Behavior," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 447-462.
    • Handle: RePEc:bin:bpeajo:v:10:y:1979:i:1979-2:p:447-462
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    Cited by:

    1. Benjamin M. Friedman, 1981. "Financing Capital Formation in the 1980s: Issues for Public Policy," NBER Working Papers 0745, National Bureau of Economic Research, Inc.
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    13. Burda, Michael & Hamermesh, Daniel S. & Genadek, Katie R., 2017. "Non-Work at Work, Unemployment and Labor Productivity," CEPR Discussion Papers 12087, C.E.P.R. Discussion Papers.
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    16. Riggi, Marianna, 2019. "Capital Destruction, Jobless Recoveries, And The Discipline Device Role Of Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 23(2), pages 590-624, March.
    17. Jack H. Beebe & Jane Haltmaier, 1980. "An intersectoral analysis of the secular productivity slowdown," Economic Review, Federal Reserve Bank of San Francisco, issue Fall, pages 7-28.
    18. J. Bradford De Long & Lawrence H. Summers, 1984. "Are Business Cycles Symmetric?," NBER Working Papers 1444, National Bureau of Economic Research, Inc.
    19. Burnside, Craig & Eichenbaum, Martin & Rebelo, Sergio, 1993. "Labor Hoarding and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 245-273, April.
    20. Voth, Joachim, 2005. "Credit Rationing and Crowding Out During the Industrial Revolution," Department of Economics, Working Paper Series qt4qw3v8q6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    21. Jeremy J. Nalewaik, 2011. "Forecasting recessions using stall speeds," Finance and Economics Discussion Series 2011-24, Board of Governors of the Federal Reserve System (U.S.).
    22. Maki, Wilbur R. & Meagher, Patrick D. & Laulainen, Leonard A., Jr., 1980. "Economic Trade-Off Analysis Of State Industrial Development Policies," Staff Papers 13769, University of Minnesota, Department of Applied Economics.

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