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Review of Radical Political Economics
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Puzzles, Paradoxes, and Regularities: Cyclical and Structural Productivity in the United States (1950–2005)

Yongbok Jeon

Industrial Strategy Division, Hyundai Research Institute, Hyundai Building 11th Floor 140-2 Gye-dong, Jongno-gu, Seoul, Korea, ybjeon{at}hri.co.kr

Matías Vernengo

Department of Economics, 1645 Central Campus Drive, Room 326, University of Utah, Salt Lake City, UT 84112-9300, vernengo{at}economics.utah.edu

Changes in labor productivity have been a source of puzzlement and paradoxical results for economists. We suggest that puzzles and paradoxes vanish once two simple regularities are properly acknowledged. Okun's and Verdoorn's laws explain 87 percent of all the variations in labor productivity. Also, our estimation method and our results suggest that conventional measures of Okun's Law have overestimated the value of the Okun coefficient, and accepted a greater degree of variability than is actually guaranteed by the empirical evidence. Okun's Law has been relatively stable through time, and there has been no significant decrease in the value of the parameter since the 1960s.

Key Words: productivity • cycle • structural change

This version was published on September 1, 2008

Review of Radical Political Economics, Vol. 40, No. 3, 237-243 (2008)
DOI: 10.1177/0486613408320002
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