Working Paper: CEPR ID: DP12747
Authors: Sangmin Aum; Sang Yoon; Tim Lee; Yongseok Shin
Abstract: Aggregate productivity growth in the U.S. has slowed down since the 2000s. We quantify the importance of differential productivity growth across occupations and across industries, and the rise of computers since the 1980s, for the productivity slowdown. Complementarity across occupations and industries in production shrinks the relative size of those with high productivity growth, reducing their contributions toward aggregate productivity growth, resulting in its slowdown. We find that such a force, especially the shrinkage of occupations with above-average productivity growth through ``routinization,'' was present since the 1980s. Through the end of the 1990s, this force was countervailed by the extraordinarily high productivity growth in the computer industry, of which output became an increasingly more important input in all industries (``computerization''). It was only when the computer industry's productivity growth slowed down in the 2000s that the negative effect of routinization on aggregate productivity became apparent. We also show that the decline in the labor income share can be attributed to computerization, which substitutes labor across all industries.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high productivity growth occupations (O49) | reduced contribution to aggregate productivity growth (O49) |
| computer industry (L63) | aggregate productivity (E23) |
| computerization (L86) | labor income share (E25) |
| routinization (L23) | reduced contribution to aggregate productivity growth (O49) |