tag:blogger.com,1999:blog-2499715909956774229.post4121540278631828582..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Average Labor ProductivityStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-2499715909956774229.post-48366205925702332602011-01-24T01:11:12.153-08:002011-01-24T01:11:12.153-08:00The results are essentially driven by what we meas...<i>The results are essentially driven by what we measure and what we don't</i><br /><br />I think we don't measure illegal aliens well (in the US), and the drop in construction caused a huge drop in illegals being employed in the cash, mostly non-measured economy. <br /><br />But I don't have any data on this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-91077231317113227432011-01-20T08:45:46.103-08:002011-01-20T08:45:46.103-08:00Here's Simon Van Norden's graph of US manu...Here's Simon Van Norden's graph of US manufacturing productivity over the recession, compared to the rest of the economy, to test anon1's theory.<br /><br />http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/01/cyclical-productivity-growth-and-the-manufacturing-sector.htmlNick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-43346741847866574032011-01-19T18:37:23.851-08:002011-01-19T18:37:23.851-08:00KP,
Is the greater proportional drop in intangibl...KP,<br /><br />Is the greater proportional drop in intangible investment explained simply by the fact it is like physical investment, and therefore more volatile than other compenents of GDP? Can we make a case that the fraction of intangible investment in correctly-measured GDP has increased over time, explaining the change in comovements?Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-23282189896056010792011-01-19T16:32:58.060-08:002011-01-19T16:32:58.060-08:00What about intangible investment? A portion of the...What about intangible investment? A portion of the people who were let go by their firms, produced intangible investments (R&D, marketing, and other work that creates future sales), which is not well accounted for in GDP. <br /><br />When these people become unemployed we might not see much of a decline in GDP, and average labor productivity increases. <br /><br />Since a larger fraction of people let go in this recession worked in intangible investment services jobs/industries, this could perhaps partially explain the increase in productivity.<br /><br />KPAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-2389329175437185342011-01-19T15:47:13.369-08:002011-01-19T15:47:13.369-08:00anon1: Yes, that's interesting. (i) I think Eu...anon1: Yes, that's interesting. (i) I think Europe has not experienced the same high growth in services as is the case for the US. (ii) You could tie this in with the old labor hoarding story. Suppose manufacturing is more intensive in firm-specific human capital than is the case for services. Output variance might be higher in manufacturing (particularly in durables) than in services but employment could be more variable relative to to output in services than in manufacturing. Maybe this works in a way that is consistent with the data.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-55124564148676231072011-01-19T14:57:47.779-08:002011-01-19T14:57:47.779-08:00There may be different productivity dynamics in ma...There may be different productivity dynamics in manufacturing and services. A much higher % of job losses came from services in this recession. Is it possible service sector productivity is pro-cylical versus counter- for manufacturing? "Investment" in the service sector primarily involves hiring people ahead of, or to stimulate, demand growth. Eliminate growth, and employment could perhaps decline without much impact on CURRENT output. <br /><br />I believe service sector employment grew even during recessions for most of the post-War era. Thus, due to the strong secular growth of service employment, average productivity during recessions used to be driven solely by manufacturing. This changed in 2001, and even more so in 2007/8.<br /><br />Along the above lines, perhaps a disproportionate number of German job losses still came from manufacturing?Anon1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-34098405291965334662011-01-19T09:18:35.252-08:002011-01-19T09:18:35.252-08:00Steve: "You would have to give me some other ...Steve: "You would have to give me some other evidence to convince me that this is what happened."<br /><br />And, I would add, why it also happened even more in Spain, less in Ireland, and went the opposite way in Canada, Germany, UK, France, Japan, etc.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-7079206787668775102011-01-19T08:58:45.946-08:002011-01-19T08:58:45.946-08:00Another thought on van Rens/Gali: To explain the l...Another thought on van Rens/Gali: To explain the last year of data with their model would require that workers increased unobserved effort by a huge amount. You would have to give me some other evidence to convince me that this is what happened. If it is truly unobserved, then we're stuck.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-47426387280585558702011-01-19T08:52:59.732-08:002011-01-19T08:52:59.732-08:00SW,
What's this about sides? What side are yo...SW,<br /><br />What's this about sides? What side are you supposed to be on? Right now, this appears to be the silliness side.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-88997635294807358432011-01-19T08:49:18.221-08:002011-01-19T08:49:18.221-08:00Nick,
Yes, I agree that more data has to help. In...Nick,<br /><br />Yes, I agree that more data has to help. In this case, I think we need some models too. This appears to require some more serious research than we are going to do here.<br /><br />Last anonymous,<br /><br />The van Rens/Gali reference is:<br /><br />http://www.crei.cat/~vanrens/VPLP/GVR_VPLP_201007.pdf<br /><br />This is a good entry into the topic. They tell you about the relevant literature, document the facts, and then give you a model to try to make sense of it all. The results are essentially driven by what we measure and what we don't. Labor input can be adjusted on two margins: employment (extensive), and effort (intensive). The firm and the worker can observe effort, but we only see employment. There are costs of adjusting employment (a little bit hokey perhaps) which are in part going to drive the results. Those costs have to be falling over time to explain the data.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-55773589789724967182011-01-19T07:49:05.093-08:002011-01-19T07:49:05.093-08:00Prof W, what do you think of van Rens and Gali'...Prof W, what do you think of van Rens and Gali's explanation?<br />"We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity has vanished, (ii) the relative volatility of employment has risen, and (iii) the relative (and absolute) volatility of the real wage has risen. We propose an explanation for all three changes that is based on a common source: a decline in labor market frictions. We develop a simple model with labor market frictions, variable effort, and endogenous wage rigidities to illustrate the mechanisms underlying our explanation. We show that the reduction in frictions may also have contributed to the observed decline in output volatility."<br /><br />anon from txAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-49298791480828595232011-01-19T06:25:07.778-08:002011-01-19T06:25:07.778-08:00Anonymous: that's interesting about those othe...Anonymous: that's interesting about those other countries. Bang goes my theory. Pity. It was such a lovely theory.<br /><br />But German productivity recovered when it began to exit the recession. So Germany is procyclical, which is normal.<br /><br />"(though there is absolutely nothing even close to the 6% increase in the USA)"<br />Yes there is: Spain.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-27997465805221645602011-01-19T06:13:04.785-08:002011-01-19T06:13:04.785-08:00Putting in other countries with a large decline in...Putting in other countries with a large decline in construction (Bulgaria, Latvia, Lithuania, Estonia, Romania, Greece) also doesn't work. <br /><br />However. All these countries showed fast growth of labor productivity before 2008 - and lackluster growth or even falling productivity after 2008, while productivity in rich Germany grew again, in 2010 (though there is absolutely nothing even close to the 6% increase in the USA).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-48257411951594793392011-01-19T04:16:53.204-08:002011-01-19T04:16:53.204-08:00Steve: when the data we have are consistent with m...Steve: when the data we have are consistent with many possible explanations, one good strategy is to widen the data set.<br /><br />Looking outside the US I saw something that really surprised me. Spain had even bigger pro-cyclical productivity than the US. And Ireland's productivity was a bit pro-cyclical too. All the other countries I looked at (the G7) had counter-cyclical productivity.<br /><br />So, I thought, what do Spain, Ireland, and the US have in common? And what makes all three different from the other countries? They don't seem to have things like tight/easy labour laws and weak/strong unions in common.<br /><br />My initial guess was that all three had a big drop in construction.<br />http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/01/spain-is-even-more-exceptional-than-the-us.html<br /><br />But then Stephen Gordon got data on construction employment, and it didn't fit my theory as well as I had hoped. The ranking in Pro-cyclical productivity was Spain, US, Ireland. The ranking in big drops in construction employment was Ireland, Spain, US.<br />http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/01/international-comparisons-of-construction-employment-in-the-recession.html<br /><br />But still, I think we all need to look at more than the US if we want to resolve this puzzle.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-42411637292909188642011-01-18T21:16:09.062-08:002011-01-18T21:16:09.062-08:00...to continue on this argument we've been dis......to continue on this argument we've been discussing...<br /><br />"In any case, uncovering what is causing the recent productivity increase is very important. For example, if this is Schumpeterian creative destruction at work, then that is cause for optimism, as that would tell us that the increase in aggregate productivity is permanent, and this sets the stage for future growth in GDP and employment. However, if the recent productivity increase reflects only a temporary change in the sectoral composition of output, the effect is only temporary, and we should be less optimistic."<br /><br />Do you see how hard this is? "Important" and "optimistic"? Doesn't sound like "objective" analysis to me.<br /><br />I'm not trying to "troll" your blog...but the best arguments for my side seem to be the ones you are making. I think my point has been made, and i will refrain from making it again.<br /><br />SMAnonymousnoreply@blogger.com