A final cause of the jobless recovery

In past notes we talked about the different scenarios that can be given a jobless recovery. In this note we will discuss the last cause, the increase in productivity. When the recession has yielded, and the recovery begins, companies will not re-hire, then fewer workers have to meet higher demand, therefore the business productivity increases. The graph shows the production per hour worked in the manufacturing sector in Mexico. As can be seen, the labor productivity of the sector rose in the quarter following the trough of economic recessions of 1995 and 2002.