By Guillermo Felices of the Bank's Structural Economic Analysis Division.
The strength of employment during the recent slowdown is sometimes taken as evidence of labour hoarding. But the extent of such hoarding is difficult to measure. This article reviews different definitions of labour hoarding and a variety of ways of measuring it using aggregate data. Most of these measures indicate that labour has been underutilised during the recent slowdown, implying that firms have indeed hoarded labour to some extent. However, the magnitude of the reduction in utilisation differs across these measures. The evidence also suggests that the recent decrease in utilisation has been limited compared with previous episodes in which labour utilisation was significantly below trend.
Assessing the extent of labour hoarding