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Procyclical Labour Productivity, Increasing Returns to Labour and Labour Hoarding in Car Assembly Plant Employment

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  • Aizcorbe, Ana M

Abstract

This paper empirically examines the sources of procyclicality in labor productivity for a panel of U.S. auto assembly plants from 1978-85. An employment demand equation, derived from a cost-minimization model, is estimated to test for the presence of increasing returns and labor hoarding on the employment dimension. The data used match employment and wage data from the BLS Current Establishment Survey to publically available data on output and the nature of production at these plants. Statistical evidence in favor of both increasing returns and hoarding is found. These findings suggest that the observed procyclicality of labor productivity in this industry is due to both the nature of technology (increasing returns) as well as attempts by plant managers to maintain a reserve of experienced workers (labor hoarding). Copyright 1992 by Royal Economic Society.

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  • Aizcorbe, Ana M, 1992. "Procyclical Labour Productivity, Increasing Returns to Labour and Labour Hoarding in Car Assembly Plant Employment," Economic Journal, Royal Economic Society, vol. 102(413), pages 860-873, July.
  • Handle: RePEc:ecj:econjl:v:102:y:1992:i:413:p:860-73
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    Cited by:

    1. Jonas D. M. Fisher & Jeffrey R. Campbell, 2000. "Aggregate Employment Fluctuations with Microeconomic Asymmetries," American Economic Review, American Economic Association, vol. 90(5), pages 1323-1345, December.
    2. J. Bradford DeLong & Robert J. Waldmann, 1997. "Interpreting procyclical productivity: evidence from a cross-nation cross-industry panel," Economic Review, Federal Reserve Bank of San Francisco, pages 33-52.
    3. Cecilia Jona-Lasinio & Stefano Manzocchi, 2014. "Intangible Assets and Productivity Growth Differentials across EU Economies: The Role of ICT and R&D," Rivista di Politica Economica, SIPI Spa, issue 1, pages 355-381, January-M.
    4. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 2001. "Labor Productivity: Structural Change And Cyclical Dynamics," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 420-433, August.
    5. Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
    6. Hall, George J., 2000. "Non-convex costs and capital utilization: A study of production scheduling at automobile assembly plants," Journal of Monetary Economics, Elsevier, vol. 45(3), pages 681-716, June.
    7. Neumann, Todd C. & Fishback, Price V. & Kantor, Shawn, 2010. "The Dynamics of Relief Spending and the Private Urban Labor Market During the New Deal," The Journal of Economic History, Cambridge University Press, vol. 70(01), pages 195-220, March.
    8. Daniel J. Vine & Valerie A. Ramey, 2006. "Declining Volatility in the U.S. Automobile Industry," American Economic Review, American Economic Association, vol. 96(5), pages 1876-1889, December.
    9. Cooper, Russell & Haltiwanger, John, 1993. "The Aggregate Implications of Machine Replacement: Theory and Evidence," American Economic Review, American Economic Association, vol. 83(3), pages 360-382, June.
    10. Hart, Robert A. & Malley, James R., 2000. "Marginal cost and price over the business cycle: comparative evidence from Japan and the United States," European Journal of Political Economy, Elsevier, vol. 16(3), pages 547-569, September.
    11. Antonio García Sánchez & María del Mar Vázquez Méndez, 2005. "The timing of work in a general equilibrium model with shiftwork," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 149-179, January.
    12. Robert A. Hart & J Malley (University of Glasgow), 1996. "Labor Productivity and the Cycle," Working Papers 9613, Business School - Economics, University of Glasgow.
    13. Robertson, Raymond & Dutkowsky, Donald H., 2002. "Labor adjustment costs in a destination country: the case of Mexico," Journal of Development Economics, Elsevier, vol. 67(1), pages 29-54, February.
    14. Chirinko, Robert S., 1995. "Nonconvexities, labor hoarding, technology shocks, and procyclical productivity a structural econometric analysis," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 61-98.
    15. Guillaume R. Fréchette, 2006. "Panel Data Analysis of the Time-Varying Determinants of Corruption," CIRANO Working Papers 2006s-28, CIRANO.
    16. Lucas Navarro & Raimundo Soto, 2001. "Procyclical productivity : evidence from an emerging economy," Working Papers Central Bank of Chile 109, Central Bank of Chile.
    17. Faria, Joao & Jellal, Mohamed, 2009. "Dynamic of Employment and Wages Incentives," MPRA Paper 17183, University Library of Munich, Germany.
    18. Richard Miller, 2001. "Firms' Cost Functions: A Reconstruction," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(2), pages 183-200, March.
    19. Lapatinas, Athanasios, 2009. "Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms," Labour Economics, Elsevier, vol. 16(5), pages 521-533, October.
    20. Timothy F. Bresnahan & Valerie A. Ramey, 1994. "Output Fluctuations at the Plant Level," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 593-624.
    21. George J. Hall, 1996. "Non-convex costs and capital utilization: a study of production and inventories at automobile assembly plants," Working Paper Series, Macroeconomic Issues WP-96-25, Federal Reserve Bank of Chicago.

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