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Puzzles, Paradoxes and Regularities: Cyclical and Structural Productivity in the US (1950-2005)

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  • Yongbok Jeon
  • Matías Vernengo

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 and Verdoorns Laws explain 87 percent of all the variations in labor productivity. Also, our estimation method and our results suggest that conventional measures of Okuns Law have overestimated the value of the Okun coefficient, and accepted a greater degree of variability than is actually guaranteed by the empirical evidence. Okuns Law has been relatively stable through time, and there is no significant decrease in the value of the parameter since the 1960s.

Suggested Citation

  • Yongbok Jeon & Matías Vernengo, 2007. "Puzzles, Paradoxes and Regularities: Cyclical and Structural Productivity in the US (1950-2005)," Working Paper Series, Department of Economics, University of Utah 2007_07, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2007_07
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    File URL: http://economics.utah.edu/research/publications/2007_07.pdf
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    References listed on IDEAS

    as
    1. Ho-Chuan Huang & Shu-Chin Lin, 2006. "A flexible nonlinear inference to Okun's relationship," Applied Economics Letters, Taylor & Francis Journals, vol. 13(5), pages 325-331.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Okun's Law is doing fine
      by Matias Vernengo in Naked Keynesianism on 2012-08-24 17:14:00

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    Cited by:

    1. Matteo Deleidi & Claudia Fontanari & Santiago José Gahn, 2023. "Autonomous demand and technical change: exploring the Kaldor–Verdoorn law on a global level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 57-80, April.

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    More about this item

    Keywords

    Productivity; Cycle; Structural Change;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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