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Puzzles, Paradoxes, and Regularities: Cyclical and Structural Productivity in the United States (1950–2005)

Author

Listed:
  • Yongbok Jeon

    (Industrial Strategy Division, Hyundai Research Institute, Hyundai Building 11th Floor 140-2 Gye-dong, Jongno-gu, Seoul, Korea, ybjeon@hri.co.kr)

  • Matías Vernengo

    (Department of Economics, 1645 Central Campus Drive, Room 326, University of Utah, Salt Lake City, UT 84112-9300, vernengo@economics.utah.edu)

Abstract

Changes in labor productivity have been a source of puzzlement and paradoxical results for economists. We suggest that puzzles and paradoxes vanish once two simple regularities are properly acknowledged. Okun's and Verdoorn's laws explain 87 percent of all the variations in labor productivity. Also, our estimation method and our results suggest that conventional measures of Okun's Law have overestimated the value of the Okun coefficient, and accepted a greater degree of variability than is actually guaranteed by the empirical evidence. Okun's Law has been relatively stable through time, and there has been no significant decrease in the value of the parameter since the 1960s.

Suggested Citation

  • Yongbok Jeon & Matías Vernengo, 2008. "Puzzles, Paradoxes, and Regularities: Cyclical and Structural Productivity in the United States (1950–2005)," Review of Radical Political Economics, Union for Radical Political Economics, vol. 40(3), pages 237-243, September.
    • Handle: RePEc:sae:reorpe:v:40:y:2008:i:3:p:237-243
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    Citations

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    Cited by:

    1. Matteo Deleidi & Walter Paternesi Meloni & Antonella Stirati, 2020. "Tertiarization, productivity and aggregate demand: evidence-based policies for European countries," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1429-1465, November.
    2. Alcino F. Camara-Neto & Matías Vernengo, 2012. "Keynes after Sraffa and Kaldor: Effective Demand, Accumulation and Productivity Growth," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 10, Edward Elgar Publishing.

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