Unemployment and Productivity, Slowdowns and Speed-Ups: Evidence Using Common Shifts

Sven Schreiber
2009 The B.E. Journal of Macroeconomics  
We investigate the controversial issue whether unemployment is related to productivity growth in the long run, using U.S. data in a framework of infrequent mean shifts. Tests find (endogenously dated) shifts in 1973/74 and 1994/95, system techniques indicate that the shifts are common features, and the implied long-run link between the two variables is negative. Therefore the secular decline of unemployment since the mid 1990s indeed stemmed from higher average productivity growth. The initial
more » ... rowth. The initial and final regimes are essentially equal, thus supporting theories that explain the productivity slowdown by a slow adoption process of IT with associated learning costs.
doi:10.2202/1935-1690.1818 fatcat:s47cpakk35hj3e474lxlw7abwe