AG on globalization

Brad De Long delong at econ.Berkeley.EDU
Wed Aug 30 14:23:07 PDT 2000

>Brad DeLong wrote:
>> >[Layoffs promote employment, says AG. "The second derivative of
>> >output per hour still appears to be positive." Next year in Jackson
>> >Hole!]
>> Well, Alan Greenspan said that employment-at-will promotes cost
>> savings from taking advantage of technological change, that faster
>> adoption of new technologies means higher productivity growth, that
>> higher productivity growth means faster warranted real wage growth,
>> that faster warranted real wage growth means that the sustainable
>> average unemployment rate that keeps actual real wage growth equal to
>> warranted real wage growth is lower...
> Hello, Brad. Welcome back from the heartland.
> So, if employment-at-will has enabled companies to take advantage of
>new technologies, why has there been no structural acceleration of
>productivity growth in 90 percent of the US economy, as Prof. Gordon tells
>us? And if employment-at-will does nothing to help nine tenths of American
>industry, why do we need it?
> Seth

Dan Sichel says (and I agree) that Gordon's cyclical adjustment factors are too large, and are masking an acceleration of trend productivity growth outside of durable manufacturing.

But I could be wrong...

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