What Explains the Post-2004 U.S. Productivity Slowdown?

Alexander Murray ()

International Productivity Monitor, 2018, vol. 34, 81-109

Abstract: Economic theory and history show that labour productivity growth is the main driver of rising living standards, so changes in the trend rate of productivity growth have profound implications for a society's future prosperity. The average annual rate of business sector labour productivity growth in the United States declined by 1.9 percentage points between the 1995-2004 period and the 2004-2015 period, from 3.2 per cent to 1.3 per cent. This article summarizes the state of knowledge on the causes of the post-2004 slowdown in U.S. productivity growth. Official growth accounting estimates indicate that 60-65 per cent of the labour productivity decline is accounted for by a decline in total factor productivity growth, while 30-35 per cent is accounted for by a decline in the rate of capital deepening. Three industries account for over 80 per cent of the aggregate labour productivity decline: manufacturing, wholesale trade, and retail trade. The aggregate productivity slowdown is traceable to a decline in the productivity contributions arising from industries that produce or intensively use information and communication technology (ICT) products.

Keywords: United States; US; U.S.; Productivity Slowdown; Productivity; 2004; Post 2004; Post-2004 (search for similar items in EconPapers)
JEL-codes: D24 N22 O10 O47 O51 (search for similar items in EconPapers)
Date: 2018
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