Chapter

The Rise of Labor Productivity

Casey B. Mulligan

in The Redistribution Recession

Published in print November 2012 | ISBN: 9780199942213
Published online January 2013 | e-ISBN: 9780199980772 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199942213.003.0002
The Rise of Labor Productivity

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During the recession of 2008–9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market distortions were increasing during the recession and have remained in place during the slow recovery. Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.

Keywords: productivity; wages; labor supply residuals; work hours; 2008–9 recession

Chapter.  10161 words.  Illustrated.

Subjects: Public Economics

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