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Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle

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  • Patterson, Christina
  • Sahin, Aysegul
  • Topa, Giorgio
  • Violante, Giovanni L.

Abstract

The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.” If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors, and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two thirds of the deviations from trend-growth in UK labor productivity since 2007.

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  • Patterson, Christina & Sahin, Aysegul & Topa, Giorgio & Violante, Giovanni L., 2016. "Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle," CEPR Discussion Papers 11055, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11055
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    Cited by:

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    2. Jay Rappaport & Carlo Pizzinelli & Ms. Era Dabla-Norris, 2019. "Job Polarization and the Declining Fortunes of the Young: Evidence from the United Kingdom," IMF Working Papers 2019/216, International Monetary Fund.
    3. Tara Sinclair & Martha Gimbel, 2020. "Mismatch in Online Job Search," Working Papers 2020-1, The George Washington University, Institute for International Economic Policy.
    4. Kircher, Philipp A.T., 2020. "Search design and online job search – new avenues for applied and experimental research," Labour Economics, Elsevier, vol. 64(C).
    5. Turrell, Arthur & Speigner, Bradley & Copple, David & Djumalieva, Jyldyz & Thurgood, James, 2021. "Is the UK’s productivity puzzle mostly driven by occupational mismatch? An analysis using big data on job vacancies," Labour Economics, Elsevier, vol. 71(C).
    6. Goldin, Ian & Koutroumpis, Pantelis & Lafond, François & Winkler, Julian, 2020. "Why is productivity slowing down?," MPRA Paper 99172, University Library of Munich, Germany.
    7. Gyetvai, Attila & Zhu, Maria, 2021. "Coworker Networks and the Role of Occupations in Job Finding," IZA Discussion Papers 14615, Institute of Labor Economics (IZA).
    8. Claudia Macaluso, 2017. "Skill Remoteness and Post-layoff Labor Market Outcomes," 2017 Meeting Papers 569, Society for Economic Dynamics.
    9. Jung, Philip & Korfmann, Philipp & Preugschat, Edgar, 2021. "Optimal Regional Labor Market Policies," IZA Discussion Papers 14204, Institute of Labor Economics (IZA).
    10. Kyungho Song & Hyun Kim & Jisoo Cha & Taedong Lee, 2021. "Matching and Mismatching of Green Jobs: A Big Data Analysis of Job Recruiting and Searching," Sustainability, MDPI, Open Access Journal, vol. 13(7), pages 1-15, April.

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    More about this item

    Keywords

    Mismatch; Occupation; Productivity;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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