Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle

34 Pages Posted: 12 Jan 2016 Last revised: 11 Nov 2017

See all articles by Christina Patterson

Christina Patterson

Federal Reserve Banks - Federal Reserve Bank of New York

Aysegul Sahin

Federal Reserve Bank of New York

Giorgio Topa

Federal Reserve Bank of New York

Giovanni L. Violante

New York University, Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: 2016-01-01

Abstract

The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.�? If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two-thirds of the deviations from trend-growth in UK labor productivity since 2007.

Keywords: misallocation, productivity

JEL Classification: E24, E32, J24

Suggested Citation

Patterson, Christina and Sahin, Aysegul and Topa, Giorgio and Violante, Giovanni L., Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle (2016-01-01). FRB of NY Staff Report No. 757. Available at SSRN: https://ssrn.com/abstract=2714276

Christina Patterson (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Aysegul Sahin

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Giorgio Topa

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Giovanni L. Violante

New York University, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-992-9771 (Phone)
212-995-4186 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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