Productivity Slowdown Research Articles

Comment on 'Computerizing Industries and Routinizing Jobs: Explaining Trends in Aggregate Productivity' by Sangmin Aum, Sang Yoon (Tim) Lee and Yongseok Shin

Aum, Lee, and Shin (2018) quantify the impact of production complementarities and differential productivity growth across occupations and sectors on the slowdown of aggregate productivity growth. This note expands their work to study substitutability between new computer equipment and labor in individual occupations as opposed to all occupations combined. Preliminary empirical evidence suggests (1) significantly different elasticities of substitution between computers and labor across occupations and (2) a strong correlation between productivity growth of computers and labor in occupations where these two inputs are complementary. When they are substitutes, however, their productivity growth rates appear uncorrelated. These findings have the potential to amplify or weaken the magnitude of the aggregate productivity slowdown explained by Aum, Lee, and Shin (2018) making their approach a promising avenue for future research.

Credit Supply and Productivity Growth

We study the impact of bank credit supply on firm output and productivity. By exploiting a matched firm-bank database which covers all the credit relationships of Italian corporations over more than a decade, we measure idiosyncratic supply-side shocks to firms' credit availability. We use our data to estimate a production model augmented with financial frictions and show that an expansion in credit supply leads firms to increase both their inputs and their output (value added and revenues) for a given level of inputs. Our estimates imply that a credit crunch will be followed by a productivity slowdown, as experienced by most OECD countries after the Great Recession. Quantitatively, the credit contraction between 2007 and 2009 could account for about a quarter of the observed decline in Italy's total factor productivity growth. The results are robust to an alternative measurement of credit supply shocks that uses the 2007-08 interbank market freeze as a natural experiment to control for assortative matching between borrowers and lenders. Finally, we investigate possible channels: access to credit fosters IT-adoption, innovation, exporting, and the adoption of superior management practices.

Firm-Level Productivity Dispersion and Convergence

The productivity slowdown has been analysed as an effect of weaker technological progress, of the digital economy or of a less efficient reallocation process. Using data on firms operating in France, we highlight that, at the technological frontier, productivity has accelerated, especially over the recent period, which contradicts the hypothesis of a decline in innovation. The most productive firms in a given year do not, however, improve their relative advantage. The convergence of firms’ productivity does not seem to have slowed down in the 2000s, which does not confirm the hypothesis of a decrease in the dissemination of innovation. On the other hand, the dispersion of productivity between firms has increased, which suggests growing difficulties in reallocating production factors, labour and capital, between firms.

Hrozba sekulární stagnace

Advanced countries are losing their predominant position in the world economy. With the long-time productivity slowdown and the present long recession, a question arises about the threat of secular stagnation of the advanced world. In searching for the roots of this threat, leading world economistst accentuate either the demand side, or the supply side of the economy. In this respect, the authors add globalization as another important factor. Globalization has resulted in long-term global and internal imbalances, and caused deep problems in the advanced countries - deindustrialization, unemployment, growing dependence on the social safety net, and a permanent increase of government intrusion into the economy. After the 2008 crisis, fiscal and monetary policy concentrates on short-term support of economic recovery, leaving aside the deeper long-term deficiencies. With multiple negative trends acting in the same direction, the threat of secular stagnation should not be overlooked.

Environmental Compliance Cost and Productivity Growth in US Manufacturing

The decade of 1970s is generally known for its dramatic increases in the price of oil. What is less known, however, is the fact that U.S. industrial sector experienced a significant slow down in productivity growth during the 1970s and 1980s. While many studies have analyzed the economic impact of higher energy prices on industry, the research on productivity slow down has been rather slow. The task of unraveling the cause of this productivity mystery is further complicated by the fact that this period also marks the beginning of an era of unprecedented environmental controls as Congress passed a series of sweeping amendments to the Clean Air Act (CAA) law in the 1970s and again in 1990. As a result of these amendments to the CAA the U.S. industry was faced with mounting environmental compliance cost. While environmental regulations are generally believed to impair productivity few studies have considered environmental regulation.

Caractérisation de l’industrie lithique de la fin du Néolithique, dans le bassin de la Seine (de la deuxième moitié du IVe millénaire à la fin du IIIe millénaire av. J.-C.)

Cet article présente une synthèse sur l’industrie lithique du Néolithique récent et final dans le bassin de la Seine (entre 3500 et 2100 avant notre ère). Son objectif est de distinguer l’industrie lithique du Néolithique récent de celle du Néolithique final et, plus largement, de préciser la définition des groupes culturels, leur localisation et leur chronologie par l’étude du mobilier lithique en contexte domestique et sépulcral. La première étape de la caractérisation porte sur les modalités de l’approvisionnement, généralement réalisé à proximité des occupations durant le Néolithique récent et final. L'importation de matières premières suit une même tendance, sur deux aspects, le sens de circulation des pièces en silex secondaire et tertiaire mais aussi la forme sous laquelle ces produits circulent. Le Néolithique final se distingue par une diffusion d’artefacts en roche verte et en silex du Turonien supérieur de la région du Grand-Pressigny. Au Néolithique récent, la production laminaire présente certaines caractéristiques au niveau du type de percussion utilisé (indirecte et directe tendre) mais aussi de la répartition géographique de ces techniques et sur le statut des produits laminaires en contexte sépulcral. Plusieurs indices suggèrent que le ralentissement de la production laminaire domestique débute à partir du Néolithique final. Cette période se distingue aussi par une diversification de l'outillage et par l’existence d’une production d’éclats par débitage centripète sur la façade maritime. L’étude comparative de plusieurs zones du bassin de la Seine met en évidence les variabilités temporelles et spatiales et interroge la validité des faciès régionaux (Augereau et al., 2007). L''existence d'un « faciès Marne » , proposé à l’issue de synthèses sur les pratiques funéraires, le mobilier en matière dure animale et la parure, est à nouveau validée par l''industrie lithique.

Productivity in Emerging-Market Economies: Slowdown or Stagnation?

This paper analyzes productivity growth trends in emerging-market economies vis-a-vis advanced economies, both in the recent global productivity slowdown and from a long-term perspective. While income has converged in most countries in the last three decades, total factor productivity has diverged. Periods of high productivity growth coincide with episodes of output accelerations, while during normal times productivity growth is modest. Most recently, the correlation between productivity growth in emerging markets and advanced economies has increased. This paper analyzes potential factors explaining this increase, which presumably is due to the slowdown in trade and microeconomic factors that underlie technology diffusion. It concludes with a discussion of long-term challenges and opportunities facing emerging-market economies in a low productivity environment.

Monetary integration vs. real disintegration: single currency and productivity divergence in the euro area

Productivity slowdown plays a prominent role in the build-up of the euro area crisis. This phenomenon affected member countries asymmetrically, causing divergence in their productivity trends. Recent research traces this divergence back to monetary integration. After reviewing the arguments that link real “disintegration” of the euro area to its monetary integration, we assess them empirically by modelling the evolution of labour productivity using a panel of sectorial data. The results indicate that monetary unification may actually have fostered divergence in productivity trends, and suggest some economic policy measures that could prevent further divergence.

Business visits, knowledge diffusion and productivity

We investigate whether labor mobility can be a distinct source of growth by studying the productivity impact of business visits (BVs), vis-a-vis that of other well-known drivers of productivity enhancement. Our analysis uses an unbalanced panel—covering on average 16 sectors per year in ten countries during the period 1998–2011—which combines unique and novel data on BVs sourced from the US National Business Travel Association with Organization for Economic Cooperation and Development (OECD) data on R&D and capital formation. We find that mobility through BVs is an effective mechanism to improve productivity, being about half that obtained by investing in R&D. This relevant finding invites viewing short-term mobility as a strategic mechanism and prospective policy tool to overcome productivity slowdowns and foster economic growth.

Sources of Long Run Economic Growth of the Russian Economy Before and after the Global Financial Crisis

Although a productivity slowdown of the global economy was observed before 2008, it was the 2008 crisis that stimulated studies on its origins. Recent literature suggests inefficient investments in machinery, human capital and organizational processes. This includes skill mismatches and a lack of technology diffusion from advanced to laggard industries and firms. To what extent is this global view helpful in understanding recent productivity slowdown of the Russian economy? The present study reports that at least some of these origins can be observed in Russia. Using conventional industry growth accounting, it compares the pre- and post-crisis sources of growth in the Russian economy. Specifically, it represents aggregate labour productivity growth as the sum of capital deepening and total factor productivity (TFP) growth in industries, and the contribution of labour reallocation between industries. It shows that the stagnation of 2008-2014 is more an outcome of the TFP slowdown and a deterioration of the allocation of labour rather than a lack of capital inputs. The TFP slowdown started in Russia a few years before the crisis, as in other major global economies, such as OECD countries, China and Brazil. Russia demonstrated relatively stable capital deepening makes the Russian pattern similar to resource abundant Australia and Canada. Next, the contribution of information and communication capital to labour productivity growth in Russia after 2008 declined, which could have hampered technology diffusion. Finally the structure of the flow of capital services in Russia changed after 2008. Before the crisis the contribution of machinery and equipment dominated, while after the crisis construction provided the most capital inputs.

Recent US Manufacturing Employment: The Exception that Proves the Rule

This Working Paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities. While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.

Comments by Kozo Kiyota, on The Global Productivity Slump: Common and Country-Specific Factors

November 01 2017 Comments by Kozo Kiyota, on The Global Productivity Slump: Common and Country-Specific Factors Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2017 by the Asian Economic Panel and the Massachusetts Institute of Technology2017Massachusetts Institute of Technology Asian Economic Papers (2017) 16 (3): 44–45. https://doi.org/10.1162/asep_a_00546 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments by Kozo Kiyota, on The Global Productivity Slump: Common and Country-Specific Factors. Asian Economic Papers 2017; 16 (3): 44–45. doi: https://doi.org/10.1162/asep_a_00546 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Kozo Kiyota: This paper investigates the common and country-specific factors of the global total factor productivity (TFP) slowdown, which is defined as the period when the growth rate of TFP was at least 1.0 percentage point (or 1.5 percentage points) lower in the second period than the first. One of the contributions of this paper is that the analysis utilized a large sample of countries and years, covering both developed and developing countries from the mid 1950s to 2011. The analysis is based on a probit or logit model where the dependent variable takes the value of one for the three years centered on the year when a TFP slump begins. The TFP data come from the Penn World Tables, version 8.1. Focusing on such factors as the changes in terms of trade and those in the energy prices, the analysis presents three major findings. First, between the mid 1950s... You do not currently have access to this content.

Inequality, financialization, and economic decline

ABSTRACTThe objective of this article is to argue that the labor productivity slowdown experienced in recent years by several advanced countries can be explained, following a Kaldorian-Classical approach, by a weak gross domestic product (GDP) performance and by a decline in the wage share. Moreover, drawing inspiration from recent post Keynesian literature, the authors identify the ongoing worsening in income equality and the increase in the degree of financialization as other major explanatory factors of sluggish productivity. The article will provide a brief literature review concerning nonmainstream attempts to endogenize labor productivity, beginning from the famous Verdoorn-Kaldor law (Verdoorn, 1949) and the Kaldor technical progress function (Kaldor, 1961) and including Sylos Labini’s productivity equation (Sylos Labini, 1984, 1999). The authors will then discuss how labor flexibility and shareholder value orientation, one of the main aspects of financialization, can negatively affect equality and labor productivity. Finally, they propose an extended version of the Sylos Labini’s equation, where productivity growth is claimed to depend positively on GDP rate of growth and the wage share, and negatively on income inequality and financialization. They submit to empirical scrutiny their extended productivity equation; the results of their estimations provide support to their theoretical argument.

Stagnation de la productivité en France : héritage de la crise ou ralentissement structurel ?

The productivity slowdown has been analysed either as an effect of the crisis, resulting from the financial and demand shocks, or as a more structural decline. In France, using macroeconomic and microeconomic data, we identify downward breaks in the trends of labour productivity and total factor productivity in the 2000s, several years before the crisis. These breaks result in historically weak rhythms of the trends. Using data on firms located in France, we highlight that, at the technological frontier, productivity has accelerated, especially over the recent period, which contradicts the hypothesis of a decline in innovation. The most productive firms in a given year do not, however, improve their relative advantage. The convergence of firms’ productivity does not seem to have slowed down in the 2000s, which does not confirm the hypothesis of a decrease in the dissemination of innovation. On the other hand, the dispersion of productivity between firms has increased, which suggests increasing difficulties in the reallocation of production factors, labour and capital, between firms.

Neoclassical versus Kaldorian explanations of Southern Europe’s productivity slowdown

The productivity slowdown in European countries is among the major stylised facts of the last two decades. Several explanations have been proposed: some focus on demand-side effects, working through Kaldor’s second law of economic growth (also known as Verdoorn’s law), others on supply-side effects determined by a misallocation of the factors of production, caused either by labour market reforms or by perverse effects of financial integration (in Europe, related to the adoption of the euro). The latter explanation is put forward by some recent studies that stress how low interest rates brought about by the monetary union may have lowered productivity by inducing capital misallocation. The aim of this paper is to investigate the robustness of the latter empirical findings and to compare them with the alternative explanation offered by the post-Keynesian growth model, which instead emphasises the relation between foreign trade and productivity, along lines that go back to Adam Smith. To do so, we use a panel of industry-level data extracted from the EU KLEMS database, comparing these alternative explanations by panel cointegration techniques. The results shed some light on the role played by the single currency in the structural divergences among euro area member countries.

Endogenous innovation under New Keynesian dynamic stochastic general equilibrium model

ABSTRACTThis paper constructs an endogenous growth model using the framework of New Keynesian dynamic stochastic general equilibrium models. We incorporate the Schumpeterian approach that generates seemingly sticky prices and reinterpret the Calvo mechanism from the perspective of Bertrand competition and successful entrepreneurs. Our results demonstrate that both positive productivity shocks and endogenous innovation have a negative effect on subsequent endogenous innovation. These self-destructive effects of endogenous innovation might account for the IT productivity paradox and productivity slowdown seen in advanced countries. Furthermore, it is shown that there are both neutral and non-neutral properties of monetary policy shocks. They are neutral in terms of the growth effect, but non-neutral in terms of the level effect. In particular, expansionist monetary policies are desirable to facilitate endogenous innovation.

Is Slow Economic Growth the ‘New Normal’ for Europe?

This paper considers future European growth prospects in the light of a new productivity paradox, namely, the co-existence of a productivity slowdown and exciting new technologies. Several potential explanations are reviewed. It is argued that while some are unpersuasive it is too soon to be sure which carry the most weight. This has the implication that while the slowdown is real, it is not necessarily permanent. A key, hotly disputed issue is the future economic impact of technological progress on which forecasts differ dramatically. Supply-side reform could have a strong positive effect, but this is not likely to happen.

The legacy and promise of Vannevar Bush: rethinking the model of innovation and the role of public policy

ABSTRACTThe linear model of innovation argues that innovation takes place in a unidirectional sequence, with basic research directly diffusing in marketable product or process innovations. This perspective has served society well in past decades. However, recent productivity slowdowns in developed economies and the failure of innovation policies to continue to deliver desired results have called this perspective into question. Scholars explain these slowdowns by the oversimplification of the linear model which fails to consider the complexities associated with innovation processes. Although it is generally believed that Vannevar Bush’s report Science – The Endless Frontier – was based on his belief in a linear model of innovation and the notion that basic research is the ultimate source of all innovation, an examination of Bush’s writings and his life reveals that he believed in a more sophisticated model in which basic and applied research cross-fertilize each other and in which government’s job is not so much to stimulate basic research as it is to facilitate interactions between basic and applied research for the benefit of both and the prosperity of society. This paper explicates Bush’s model of the research and innovation process, explores the implications of that model, and derives policy recommendations.

Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown

A large literature documents declining measures of business dynamism including high-growth young firm activity and job reallocation. A distinct literature describes a slowdown in the pace of aggregate labor productivity growth. We relate these patterns by studying changes in productivity growth from the late 1990s to the mid 2000s using firm-level data. We find that diminished allocative efficiency gains can account for the productivity slowdown in a manner that interacts with the within-firm productivity growth distribution. The evidence suggests that the decline in dynamism is reason for concern and sheds light on debates about the causes of slowing productivity growth.

The economies of speed, [formula omitted] and the productivity slowdown

Drawing on basic physics, Kummel [24] and Beaudreau [4,5] attributed the productivity slowdown to the OPEC price-hike-led decrease in the rate of growth of energy consumption in the mid-1970s. The high post-WWII energy use growth rates observed in most OECD countries fell drastically, decreasing productivity and GDP growth. However since, considerable doubt has been cast on this view. For example, why did the rate of growth of energy use in manufacturing, specifically electricity use, fall when and where the price of electricity was either unaffected or increased slightly afterwards? Second, why did it fall instantaneously—that is, without the usual lag? Third, why did energy consumption growth rates not return to their pre-1973 level once real energy prices had returned to their pre-1973 levels. Drawing from kinetics, this paper presents an alternative hypothesis, namely that energy demand-related factors, notably the physical limits to energy-based speed-ups, not energy supply-related factors, may have been behind this sudden decrease in productivity growth and hence behind the productivity slowdown. Specifically, in many industries and sectors, maximum machine speed/velocity may have been—or was near to being—reached in the late 1960s/early 1970s, making further increases physically impossible or not economically viable.