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The Relationship between Unemployment Rate and Worker Productivity

January 19, 2012 1 comment

 This relationship was stumbled upon as I was doing some sampling on the Labour Force Survey dataset for another project.

As can be seen from the Box Plot below, a pattern emerges when output per worker (productivity) is run against the standardised unemployment rate. For the normal unemployment rate (6 per cent) productivity is between 0 per cent and 1 per cent – this is good as the economy is growing.

 

When unemployment is high, between 7 and 8 per cent, productivity is either negative or stagnant. This can be used to indicate recessions. What is interesting, however, is that when unemployment is very high, 9+ per cent, productivity is also high. I am inclined to suggest this is so due to either a recovering economy or a desire, on behalf of workers, not to become unemployed.