Countercyclical Labor Productivity: The Spanish Anomaly

Research Institute of Applied Economics Working Paper 2017/12

29 Pages Posted: 9 Jun 2017

See all articles by Borja Jalón

Borja Jalón

Universidad Complutense de Madrid (UCM)

Simon Sosvilla-Rivero

UCM Institute for Economic Analysis

Jose A. Herce

Grupo AFI

Date Written: June 9, 2017

Abstract

The cyclical pattern of labor productivity has been a subject of discussion in the economic literature for long time with important theoretical implications.Many authors point out the role of labor market institutions as determinants of the cyclical pattern. For these authors, the loss of procyclicality experimented in the United States since the mid-1980s could be explained by a decrease of rigidities in labor market. Following the literature, this paper explores the role of labor regulation by analyzing the case of Spain, which has gone in a few years from a strongly procyclical pattern to a countercyclical one.

Our results suggest that the high rigidity in wages and the great flexibility in labor, related to the temporary workers after the 1984 legislative reform, is the main cause of the countercyclical pattern of the Spanish labor productivity. Our findings are in line with previous papers highlighting the crucial influence of labor market institutions over the cyclical pattern.

Keywords: Business cycle, labor productivity, labor regulation, multifactor productivity.

JEL Classification: E32, J30, K31, O47

Suggested Citation

Jalón, Borja and Sosvilla-Rivero, Simon and Herce, Jose A., Countercyclical Labor Productivity: The Spanish Anomaly (June 9, 2017). Research Institute of Applied Economics Working Paper 2017/12. Available at SSRN: https://ssrn.com/abstract=2983901 or http://dx.doi.org/10.2139/ssrn.2983901

Borja Jalón

Universidad Complutense de Madrid (UCM) ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain

Simon Sosvilla-Rivero (Contact Author)

UCM Institute for Economic Analysis ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain
+34913932626 (Phone)

HOME PAGE: http://www.ucm.es/info/ecocuan/ssr/

Jose A. Herce

Grupo AFI ( email )

Espanoleto, 19
Madrid, Madrid 28010
Spain
++ 34 915200101 (Phone)

HOME PAGE: www.afi.es

Register to save articles to
your library

Register

Paper statistics

Downloads
21
Abstract Views
209
PlumX Metrics