NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Labor Hoarding, Inflexible Prices, and Procyclical Productivity

Julio J. Rotemberg, Lawrence H. Summers

NBER Working Paper No. 2591
Issued in May 1988
NBER Program(s):   EFG

Hall has pointed out that, when there is perfect competition and price flexibility, labor hoarding alone will not induce the Solow residual measured using labor's share in revenues to be procyclical. We show that, even with perfect competition, a small amount of price rigidity - we assume firms must set price slightly before the level of demand becomes known - makes the extent of procyclical productivity depend mainly on the extent of labor hoarding. We show that indeed, whether productivity is measured via the Solow method using labor's share in revenues or using other methods, it tends to be more procyclical in industries and in nations where labor hoarding is more important

download in pdf format
   (338 K)

email paper

This paper is available as PDF (338 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2591

Published: Published as "Inflexible Prices and Procyclical Productivity", Quarterly Journal of Economics", Vol. 105, no. 4 (1990): 851-874.

Users who downloaded this paper also downloaded these:
Burnside, Eichenbaum, and Rebelo w3556 Labor Hoarding and the Business Cycle
Carlton w3786 The Theory of Allocation and Its Implications for Marketing and Industrial Structure
Bertola and Caballero w4472 Cross Sectional Efficiency and Labor Hoarding in an Matching Model of Unemployment
Hall w1973 Chronic Excess Capacity in U.S. Industry
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us