Thursday, March 5, 2009

Update to NBER wp 14729

The BEA and BLS have revised the numbers that went into my NBER wp 14729, so I paste below versions of that paper's charts that reflect the latest numbers. Table 1's row of that paper needs to be revised to show +0.010 productivity residual change and +0.041 labor distortion change (previous estimates were +0.019 and 0.049, respectively).

It still looks like "labor distortions" explain the majority of Q4's employment decline, but now it looks an adverse "productivity shock" was pushing labor in the same direction.

Thus, if the Q3-Q4 changes persist, a lot (likely most) of this recession can be blamed on labor distortions, but (unlike the 2001 recession) some of the blame may have to be shared with adverse productivity growth.

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