Technical change and US economic growth: the interwar period and the 1990s

Abstract

Introduction Looking back over the twentieth century, the years 1948–1973 stand out as the “golden age” of labor productivity growth and living standard improvement in the United States – the result of a combination of respectable multifactor productivity (MEP) growth and robust rates of capital deepening. The period 1973–1989, in contrast, was the most disappointing, because of the virtual collapse of multifactor productivity growth during these years. The contrast between these periods gave rise to a raft of studies trying to pinpoint the causes of the slowdown in MFP growth and, as a consequence, labor productivity growth. More recently, attention has shifted towards determining the contribution of the IT revolution to the revival of productivity growth in the 1990s. Most of these studies, however, embrace an historical perspective that reaches back no further than 1948, the year in which most of the standard series maintained by the Bureau of Labor Statistics (BLS) begin. This chapter, in contrast, pushes the time horizon back to the beginning of the twentieth century, with particular attention to the period following the First World War and preceding US entry into the Second World War in 1941. It combines a summary of the magnitude and sources of productivity advance during the interwar years (for more details, see Field, 2003, 2006a) with a comparative examination of progress during the last decade of the century.