Productivity and unemployment: a scale-by-scale panel data analysis for the G7 countries

Does productivity growth increase or reduce unemployment? Theoretical and empirical analyses have generally provided mixed results. In this paper we analyze the empirical relationship between productivity and unemployment over different time frames using wavelet analysis. The scale-by-scale results from panel data and nonparametric regressions methods indicate that productivity-unemployment relationship is scale-dependent, that is changes over different time horizons. Specifically, productivity growth creates unemployment in the short and medium terms, but employment in the long run.