[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-325426-105":3,"detail-sidebar-cat-0-en-105":80,"doc-detail-325426-en":130},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":73,"head_meta":75,"extra_data":77,"updated_unix":79},105,"en","productivity-gains-during-business-cycles-whats-normal","Productivity Gains During Business Cycles - What\\u2019s Normal?","","Economic commentary examining why labor productivity growth is procyclical across business cycles and what typical patterns should look like. It reviews leading explanations, including procyclical technology shocks, increasing returns to scale, labor hoarding, and workforce skills depletion, then compares the expected time path using two approaches. It also highlights interpretation challenges from U.S. data, where quarterly growth is highly variable and raw patterns can be misleading.",{"@graph":14,"@context":72},[15,34,55],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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procyclical?","Question",{"text":62,"@type":63},"It is typically expressed as a positive correlation between productivity growth and output growth, meaning productivity growth tends to be higher when real GDP growth is higher and lower during contractions.","Answer",{"name":65,"@type":60,"acceptedAnswer":66},"What explanations are provided for the business-cycle pattern of productivity growth?",{"text":67,"@type":63},"The commentary discusses procyclical technology shocks, increasing returns to scale, labor hoarding, and workforce skills depletion, noting these explanations are not mutually contradictory.",{"name":69,"@type":60,"acceptedAnswer":70},"What difficulties arise when interpreting quarterly productivity growth data?",{"text":71,"@type":63},"Quarterly productivity growth is highly variable, and even within a single quarter it could be negative or very high, making it hard to infer clear patterns from raw data.","https://schema.org",{"og:url":32,"og:type":74,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":76,"canonical":32},"index,follow",{"doc_id":78,"site_id":7},325426,1792160563,{"code":4,"msg":81,"data":82},"success",[83,87,91,95,100,105,110,114,119,122,126],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":84,"show_sort_weight":85,"slug":86},"Story & 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of3.I percentfor the second and third quarters of1997,after averaging less than 1 percenta year over the previous decade.Such anincrease this late in an expansion isunusual and has led somecommentatorsto expect that the burst of productivitywill persist,but the CBOfeels thatis unlikely.  \nCongressional Budget Office¹  \nITIhe fact that no slowdown [in produc-tivity growth]is nowapparent isevi-dence...that the economy is behavingas ifit remains in amid-expansion phase,rather than an end-of-expcinsion phase.  \nEconomic Report of the President²  \nPpoducivit iks he aborfoce to heeconomy's real output,a key positionthat makes productivity growth one ofthe most eagerly forecast and analyzedeconomic statistics.A prime example ishe current business cycle,in which thepattern of productivity gains has struckmany observers as extraordinary.³  \nEconomists generally acknowledge thatlabor productivity growth is procyclical,which means that it is higher,on aver-age,when the economy is expandingand lower when the economy is con-tracting.This Economic Commentaryreviews the leading explanations for thispattern,to see what economic theoryimplies for productivity growth.Then ituses two different approaches to com-pare the time pattern of productivitygains over the business cycle.Oneapproach describes the pattern in termsof the number of quarters of economic  \n# Productivity Gains During BusinessCycles:What's Normal?\n\ngrowth since the business cycle's trough.The other approach uses our knowledgeabout the ends of past recoveries to de-scribe the typical pattern of productivitygains as acycle ages.  \n## ■ Why Should ProductivityBe Procyclical?\n\nThe procyclical nature of productivitygrowth is typically expressed as a posi-tive correlation between productivitygrowth and output growth.In otherwords,productivity growth tends to beabove average when real GDP growth isabove average.4 Theory provides at leastthree explanations for this business cycle“fact”:procyclical technology shocks,increasing returns to scale,and laborhoarding.⁵To this list I would add thedepletion of workforce skills,which canbe linked to labor hoarding.  \nProcyclical Technology Shocks.Realbusiness cycle models of the economyassume that patterns generally occurbecause labor and capital become—forsome mysterious reason—more or lessproductive.In this story,\"technologyshocks\"simply arrive,like manna fromheaven.They can introduce procyclicalproductivity growth because periodswith productivity-enhancing shocks alsotend to have higher rates of economicgrowth.The shocks can't be observed,but they're measured after the fact aswhat remains after accounting forincreases in labor and capital.⁶In thecurrent period,even this measurement isunclear,making for a time pattern ofproductivity that is uncertain but likelyto be correlated with output growth.  \nJuly 1998  \nEconomic analysts yearn for a meansof predicting labor productivitygrowth.Can theyget some help frombusiness cycle patterns?  \nIncreasing Returns to Scale.As afirm's output increases,the unit cost ofproduction falls.Instead of changingover the business cycle,firms'produc-tion technologies might just be respond-ing to higher returns to scale.Clearly,using equipment and workers that werepreviously idle will yield better returns ifthese resources had to be paid regardlessof whether they were producing goods.This would raise measured productivitywithout any change in production tech-niques as the firm increases output inresponse to rising demand.Because thelimits of firms'production technologiesare not known,however,the actual pat-tern over the business cycle is uncertain.  \nLabor Hoarding.This explanationrelies on the idea that firms hold similarnumbers of workers whether demand ishigh or low,possibly from a wish tokeep the job-specific skills that the firmmight lose by laying off workers.Whilethis model suggests that productivitywould rise rapidly as the ","cbCainb1GzSWNsty","https://ap.wps.com/l/cbCainb1GzSWNsty","pdf",1200405,"English","# Productivity Gains During Business Cycles: What\\u2019s Normal?\n## Why Should Productivity Be Procyclical?\n## Quarterly Time Patterns, 1949-97","[{\"question\":\"Why is labor productivity growth considered procyclical?\",\"answer\":\"It is typically expressed as a positive correlation between productivity growth and output growth, meaning productivity growth tends to be higher when real GDP growth is higher and lower during contractions.\"},{\"question\":\"What explanations are provided for the business-cycle pattern of productivity growth?\",\"answer\":\"The commentary discusses procyclical technology shocks, increasing returns to scale, labor hoarding, and workforce skills depletion, noting these explanations are not mutually contradictory.\"},{\"question\":\"What difficulties arise when interpreting quarterly productivity growth data?\",\"answer\":\"Quarterly productivity growth is highly variable, and even within a single quarter it could be negative or very high, making it hard to infer clear patterns from raw data.\"}]","Productivity Gains During Business Cycles - What\\u2019s Normal? | PDF",1789970472,13]