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June 18, 2013



A very excellent post! My mate Karl sums it all up in the last paragraph.

Paul McCormack

My personal treatment at the hands of employers in the last few years has shredded any sense of loyalty to any future employer. The treatment of workers has, frankly, been disgraceful, even though corporate profits have remained high. Employers seem to have used this period as an excuse to forget about their obligations, whilst the highest earners have continued to do well.

Ralph Musgrave

The bulk of studies seem to confirm the hysteresis effect, but there’s actually one study that disputes the effect:


Also I’d question Snower and Lechthaler’s claim that “prolonged recession might induce some elite workers to lose their pro-work ethic.” Employers tend to hoard their “elite” workers in a recession, while sacking the less productive.

Szczepan Stachura

Why it always have to be workers? I feel like discussing Ricardo’s „worker plus shovel” model. In recession firms have no incentive to invest in new productive capacity, as current one is not used. Potential output drops.
As they don’t trade that much they loose contacts and market knowledge. Potential output drops.
As they have acces to cheap and willing labor, and don’t have to try hard to meet demand, they don’t improve organization and technology. Productivity may go up, as laborers try harder, and weaker of them are fired (as Ralph Musgrave said above)– but long run productivity is stagnating.
Did I say before, that potential output drops?


"Employers tend to hoard their “elite” workers in a recession, while sacking the less productive."

Why do you think that? Do you have any evidence for it?

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