The purpose of this study is to investigate the significance of the labor hoarding phenomenon in explaining the SRIRL paradox, or procyclical productivity. Accordingly previous work in these areas is particularly important. First, the direct measurement of labor hoarding shows how prominent the labor hoarding phenomenon is in various industries. Second, evidences of SRIRL at business cycle frequencies are mixed. Third, recent literature on labor hoarding tests indicates that labor hoarding is an indispensible ingredient to explain SRIRL or procyclical productivity among competing hypotheses.
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