A BEJM Topics article.

Abstract

We investigate the controversial issue whether unemployment is related to productivity growth in the long run, using U.S. data in a framework of infrequent mean shifts. Univariate tests find (endogenously dated) shifts in 1974, 1986, and 1996. System co-breaking techniques indicate that the shifts are common features, and the implied long-run link between the two variables is negative. Therefore the secular decline of unemployment since the mid 1990's indeed seems related to higher average productivity growth. The initial and final regimes are essentially equal, which would be compatible with explanations of the productivity slowdown that point to historical learning costs of information technology adoption.

Submitted: August 27, 2008 · Accepted: November 2, 2008 · Published: October 19, 2009

Recommended Citation

Schreiber, Sven (2009) "Unemployment and Productivity, Slowdowns and Speed-Ups: Evidence Using Common Shifts," The B.E. Journal of Macroeconomics: Vol. 9 : Iss. 1 (Topics), Article 39.
DOI: 10.2202/1935-1690.1818
Available at: http://www.bepress.com/bejm/vol9/iss1/art39