Is There a Trade-off Between Unemployment and Productivity Growth?
Is There a Trade-off Between Unemployment and Productivity Growth?

Author: Robert James Gordon

Publisher:

Published: 1995

Total Pages: 80

ISBN-13:

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This paper shows how misleading is the facile contrast of Europe following a path of high productivity growth, high unemployment, and relatively greater income equality, in contrast to the opposite path being pursued by the United States. While structural shocks may initially create a positive tradeoff between productivity and unemployment, they set in motion a dynamic path of adjustment involving capital accumulation or decumulation that in principle can eliminate the tradeoff. The main theoretical contributions of this paper are to show how a productivity-unemployment tradeoff might emerge and how it might subsequently disappear as this dynamic adjustment path is set in motion. Its empirical work develops a new data base for levels and growth rates of output per hour, capital per hour, and multifactor productivity in the G-7 nations both for the aggregate economy and for nine sub-sectors. It provides regression estimates that decompose observed differences in productivity growth across sectors. It finds that much of the productivity growth advantage of the four large European countries over the United States is explained by convergence and by more rapid capital accumulation, and that the only significant effect of higher unemployment is to cause capital accumulation to decelerate, thus reducing the growth rate of output per hour relative to multi-factor productivity.

Is There a Tradeoff Between Unemployment and Productivity Growth?
Is There a Tradeoff Between Unemployment and Productivity Growth?

Author: Robert J. Gordon

Publisher:

Published: 1998

Total Pages:

ISBN-13:

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This paper shows how misleading is the facile contrast of Europe following a path of high productivity growth, high unemployment, and relatively greater income equality, in contrast to the opposite path being pursued by the United States. While structural shocks may initially create a positive tradeoff between productivity and unemployment, they set in motion a dynamic path of adjustment involving capital accumulation or decumulation that in principle can eliminate the tradeoff. The main theoretical contributions of this paper are to show how a productivity-unemployment tradeoff might emerge and how it might subsequently disappear as this dynamic adjustment path is set in motion. Its empirical work develops a new data base for levels and growth rates of output per hour, capital per hour, and multifactor productivity in the G-7 nations both for the aggregate economy and for nine sub-sectors. It provides regression estimates that decompose observed differences in productivity growth across sectors. It finds that much of the productivity growth advantage of the four large European countries over the United States is explained by convergence and by more rapid capital accumulation, and that the only significant effect of higher unemployment is to cause capital accumulation to decelerate, thus reducing the growth rate of output per hour relative to multi-factor productivity

Global Productivity
Global Productivity

Author: Alistair Dieppe

Publisher: World Bank Publications

Published: 2021-06-09

Total Pages: 552

ISBN-13: 1464816093

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The COVID-19 pandemic struck the global economy after a decade that featured a broad-based slowdown in productivity growth. Global Productivity: Trends, Drivers, and Policies presents the first comprehensive analysis of the evolution and drivers of productivity growth, examines the effects of COVID-19 on productivity, and discusses a wide range of policies needed to rekindle productivity growth. The book also provides a far-reaching data set of multiple measures of productivity for up to 164 advanced economies and emerging market and developing economies, and it introduces a new sectoral database of productivity. The World Bank has created an extraordinary book on productivity, covering a large group of countries and using a wide variety of data sources. There is an emphasis on emerging and developing economies, whereas the prior literature has concentrated on developed economies. The book seeks to understand growth patterns and quantify the role of (among other things) the reallocation of factors, technological change, and the impact of natural disasters, including the COVID-19 pandemic. This book is must-reading for specialists in emerging economies but also provides deep insights for anyone interested in economic growth and productivity. Martin Neil Baily Senior Fellow, The Brookings Institution Former Chair, U.S. President’s Council of Economic Advisers This is an important book at a critical time. As the book notes, global productivity growth had already been slowing prior to the COVID-19 pandemic and collapses with the pandemic. If we want an effective recovery, we have to understand what was driving these long-run trends. The book presents a novel global approach to examining the levels, growth rates, and drivers of productivity growth. For anyone wanting to understand or influence productivity growth, this is an essential read. Nicholas Bloom William D. Eberle Professor of Economics, Stanford University The COVID-19 pandemic hit a global economy that was already struggling with an adverse pre-existing condition—slow productivity growth. This extraordinarily valuable and timely book brings considerable new evidence that shows the broad-based, long-standing nature of the slowdown. It is comprehensive, with an exceptional focus on emerging market and developing economies. Importantly, it shows how severe disasters (of which COVID-19 is just the latest) typically harm productivity. There are no silver bullets, but the book suggests sensible strategies to improve growth prospects. John Fernald Schroders Chaired Professor of European Competitiveness and Reform and Professor of Economics, INSEAD

Productivity Growth and the Phillips Curve
Productivity Growth and the Phillips Curve

Author: Laurence M. Ball

Publisher:

Published: 2001

Total Pages: 50

ISBN-13:

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We present a model in which workers' aspirations for wage increases adjust slowly to shifts in productivity growth. The model yields a Phillips curve with a new variable: the gap between productivity growth and an average of past wage growth. Empirically, this variable shows up strongly in the U.S. Phillips curve. Including it explains the otherwise puzzling shift in the unemployment-inflation tradeoff since 1995

Labor Markets and Business Cycles
Labor Markets and Business Cycles

Author: Robert Shimer

Publisher: Princeton University Press

Published: 2010-04-12

Total Pages: 189

ISBN-13: 1400835232

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Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.

For the Benefit of All: Fiscal Policies and Equity-Efficiency Trade-offs in the Age of Automation
For the Benefit of All: Fiscal Policies and Equity-Efficiency Trade-offs in the Age of Automation

Author: Mr. Andrew Berg

Publisher: International Monetary Fund

Published: 2021-07-16

Total Pages: 44

ISBN-13: 1513592963

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Many studies predict massive job losses and real wage decline as a result of the ongoing widespread automation of production, a trend that may be further aggravated by the COVID-19 crisis. Yet automation is also expected to raise productivity and output. How can we share the gains from automation more widely, for the benefit of all? And what are the attendant equity-efficiency trade-offs? We analyze this issue by considering the effects of fiscal policies that seek to redistribute the gains from automation and address income inequality. We use a dynamic general equilibrium model with monopolistic competition, including a novel specification linking corporate power to automation. While fiscal policy cannot eliminate the classic equity-efficiency trade-offs, it can help improve them, reducing inequality at small or no loss of output. This is particularly so when policy takes advantage of novel, less distortive transmission channels of fiscal policy created by the empirically observed link between corporate market power and automation.

Globalization and Unemployment
Globalization and Unemployment

Author: Helmut M. Wagner

Publisher: Springer Science & Business Media

Published: 2013-03-14

Total Pages: 385

ISBN-13: 3662040824

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Globalization and unemployment are two phenomena which are amongst the most widely discussed subjects in the economic debate today. Often, globalization is regarded as being responsible for the increase in unemployment, particularly in unskilled labor. This book deals with the correlation between globalization and unemployment under various aspects: historical aspects of globalization, empirical trends and theoretical explanations of unemployment, effects of globalization in general and of European Monetary Union in particular on umemployment, labor market policy in a global economy, the impact of fiscal policy on unemployment in a global economy, as well as the effects of globalization on inflation and national stabilization policy.