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Productivity and unemployment: a scale-by-scale panel data analysis for the G7 countries

  • Marco Gallegati , Mauro Gallegati EMAIL logo , James B. Ramsey and Willi Semmler

Abstract

Does productivity growth increase or reduce unemployment? Theoretical and empirical analyses have generally provided mixed results. In this paper we analyze the empirical relationship between productivity and unemployment over different time frames using wavelet analysis. The scale-by-scale results from panel data and nonparametric regressions methods indicate that productivity-unemployment relationship is scale-dependent, that is changes over different time horizons. Specifically, productivity growth creates unemployment in the short and medium terms, but employment in the long run.

JEL Classification: C1; C3; C5; E3

Corresponding author: Mauro Gallegati, DISES and SIEC, Polytechnic University of Marche, Ancona, Italy, e-mail:

Acknowledgments

The paper has been presented at 18th International Conference on Computing in Economics and Finance, Prague 27–29 June 2012 and at the 19th Panel data conference, Cass Business School, London, 4–5 July 2013. We thank all participants for valuable comments and suggestions.

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Supplemental Material

The online version of this article (DOI: 10.1515/snde-2014-0053) offers supplementary material, available to authorized users.


Published Online: 2015-2-7
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