Mediamacro Myth 8: Usage Growth

We receive got had the slowest recovery from a recession virtually since records began, as well as a large component subdivision of that is downwards to the abrupt financial contraction that the coalition authorities chose to undertake, despite in that location beingness no marketplace pressure level to produce so. But, supporters of the coalition mightiness say, job growth has been real strong. This is an declaration that is virtually as ludicrous as the 2013 recovery vindicates austerity virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward idea, but in that location is yet a half-truth behind it. [1]

To come across why it is ludicrous, yous merely take away to greenback that - yesteryear Definition - labour productivity is output divided yesteryear employment, as well as that over the medium to long run living standards are largely determined yesteryear productivity. So to seek as well as accept credit for potent job growth despite lack of output growth is to accept credit for miserable productivity growth (or, inwards the U.K. case, the virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward described as a luddite dot of view!

The half-truth concerns the distributional behave upon of a recession. On average nosotros are worse off inwards a recession, but those that actually experience it are workers that lose their jobs. For a given reach of output inwards a recession, it would hold upward improve if the hurting was evenly spread through cuts inwards living standards as well as fiddling growth inwards unemployment. So, if (and this if is critical) productivity growth merely paused during a recession, but as well as thence made upward for all the lost terra firma afterwards, that would in all likelihood hold upward a skillful thing.

So, inwards that real specific sense, lack of productivity growth mightiness hold upward a skillful thing given the lack of a recovery, on the supposition that nosotros larn it all dorsum ane time again later. However I dubiety real much whether the authorities would desire to accept credit for stagnant productivity during their term of purpose for 2 reasons. First, it in all likelihood has real fiddling to produce amongst them, as well as rather to a greater extent than to produce amongst the flexible labour markets encouraged yesteryear their predecessors. Second, in that location are real potent doubts that nosotros volition larn dorsum all the lost productivity growth: the OBR is assuming nosotros larn dorsum virtually none.

So to claim credit for potent job growth is the same as claiming credit for miserable productivity, as well as it is hypocritical to seek to produce the commencement as well as non the second. [2] Given that many economists argue that miserable productivity growth is our number ane job correct now, implicitly claiming credit for creating the job inwards the commencement house is somewhat bizarre.

Previous posts inwards this series

(0)virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward  virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward UK mediamacro myths: an introduction

(1)virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward  virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward 2010 Great Britain faced a financial crisis

(2) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward Labour profligacy

(3) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward The 2007 boom

(4) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward The immediate necessity of belt tightening

(5) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward The long term plan

(6) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward 2013 recovery vindication

(7) virtual absence of productivity growth over the concluding 5 years). Which is real to a greater extent than or less wanting to accept credit for the lack of growth inwards existent incomes.

In short, it is output that matters, non employment. Employment growth due to output growth is good, but job growth without output growth is not. To extol job growth without output growth could hold upward The potent recovery

[1] There are many reasons to dubiety the ‘quality’ of the job growth (see for instance David Blanchflower (pdf)), but that is non my job organization here, except inwards thence far as that helps explicate lack of productivity.

[2] Although this highly odd lack of productivity growth after a recession pretty good coincides amongst the menstruum of the coalition government, it is far from clear whether in that location is a connecter or not. If miserable productivity is downwards to firms using workers rather than uppercase because the recession addition austerity has pushed downwards wages, as well as thence in that location is a connecter betwixt austerity as well as miserable productivity. However other explanations are as possible, which is why it is called the U.K. productivity puzzle.