Journal Article Wages and Employment under Uncertain Demand Get access Martin Neil Baily Martin Neil Baily Yale University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 41, Issue 1, January 1974, Pages 37–50, https://doi.org/10.2307/2296397 Published: 01 January 1974

Journal Article Productivity Growth and Materials Use in U. S. Manufacturing Get access Martin Neil Baily Martin Neil Baily Brookings Institution Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 101, Issue 1, February 1986, Pages 185–195, https://doi.org/10.2307/1884648 Published: 01 February 1986

[This paper develops a theory of the firm's demand for labor when workers, at the time they are hired, know that they may later be laid off. The derived behavior shows how the firm, in response to price falls of increasing severity, will first reduce hours of work. After a minimum work week has been reached layoffs start. The point at which this occurs depends upon the income workers expect to receive if they are laid off. Since unemployment insurance (UI) benefits are an important determinant of this income level, they influence the number of layoffs. Given the absence of an effective incentive tax in practice, we would predict that the present UI system encourages layoffs. An effective, incentive tax could stop this encouragement. Two possible wage strategies are explored, both of which are consistent with the basic layoff and hours model. The flexible wage policy has the advantage of giving no incentive to the firm to default on the (privately) efficient layoff rules derived earlier, but seems to be inconsistent with observed short-run wage policy. The fixed wage policy has its strength and weakness the other way around.]

Examines at the microeconomic level the assumption that the rate of change of the labor supply to a firm depends on the wage paid by the firm. Concept of dynamic monopsony; Response in terms of the optimal wage path to different product prices; Properties of the optimal path. (From Ebsco)

The author reviews the latest information on productivity and the alternative explanations of the slowdown, which he concludes was partially due to a decline in innovation and work effort and mostly due the post 1973 energy price increases. Identical policy responses to the worldwide inflation were also a reason why so many countries experienced slow growth at the same time, as cyclical productivity declines were added to the structural decline. There are signs that productivity growth is recovering, which gives credence to the view that the temporary shocks of the 1970s were the culprit.

Used properly, the term 'new e-conomy' is warranted. Since 1995, there has been a wave of innovation associated with both the production and use of information technology that has been translated into improved US economic performance. In particular, there has been a substantial acceleration in trend total factor productivity growth. Most of this acceleration actually took place outside of the computer sector. Almost none of the acceleration was cyclical. There is now clear supportive evidence of an acceleration of productivity in service industries that are major purchasers of information technology such as finance and wholesale and retail trade. These gains reflect not only increased investment in information technology but also complementary innovations in business organization and policy. To be sure, as evidenced by recent financial market volatility, there have been speculative excesses, but these should not obscure the fundamental gains that have been made.