Tags: Robert Hall | labor | participation | productivity

Stanford's Hall: Labor Participation Rate, Productivity Growth Might Stay Low

By    |   Wednesday, 16 Apr 2014 06:12 PM

The depressed labor participation rate and productivity growth that have plagued the economy since the Great Recession ended in 2009 might continue for years, says Stanford University economist Robert Hall.

The labor participation rate was 63.2 percent in March, not far above December's 62.8 percent, which tied a 35-year low.

Hall argues in a new paper that people will be less inclined to seek jobs as a result of their dependence on welfare programs such as food stamps and Social Security disability payments, The Wall Street Journal reports.

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"Bulges in their enrollments appear to be highly persistent," Hall writes. "Both programs place high taxes on earnings and so discourage labor force participation among beneficiaries."

Meanwhile, non-farm productivity increased only 0.5 percent last year, tied with 2011 for the weakest showing since 1993. "There is no reason to expect" the sluggish productivity growth rate "could be reversed by a sudden increase in product demand," Hall says.

Whether it will rebound along with the overall economy represents "an unsettled question of growth economics," he says.

To be sure, JPMorgan Chase economists predict that a stronger economy will push productivity up 2.1 percent this year, The Associated Press reports. Productivity growth has averaged 2 percent a year since 1947.

Corporate cost cutting boosts productivity, while stagnant output weighs it down. On the plus side for productivity, it seems unlikely that the emphasis on cost cutting will let up soon.

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Economy
The depressed labor participation rate and productivity growth that have plagued the economy since the Great Recession ended in 2009 might continue for years, says Stanford University economist Robert Hall.
Robert Hall, labor, participation, productivity
256
2014-12-16
Wednesday, 16 Apr 2014 06:12 PM
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