Working Paper: CEPR ID: DP305
Authors: Martin Neil Baily; Robert J. Gordon
Abstract: One of the starkest differences between the recent economic performance of the US and of Europe, in addition to faster job creation in the US, is its slower productivity growth. This paper begins with data showing that US productivity growth has been essentially zero since 1973 outside of manufacturing. In contrast, productivity growth in US manufacturing has revived since 1979, and over the period 1979-87 has actually been more rapid than during the 1948-73 'golden age'.
Keywords: growth; productivity; measurement; output; prices; computers; technological change
JEL Codes: 226
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| measurement errors (C20) | observed slowdown in U.S. productivity growth (O49) |
| errors in measuring output and labor input (E23) | overstatement of productivity growth in manufacturing (O49) |
| misallocation of productivity gains across sectors (O49) | revival of manufacturing productivity since 1979 (O49) |
| improvements in computer technology (O33) | distortion of productivity measurements (D20) |
| aggregation of productivity data (O47) | misleading interpretations of underlying trends (E32) |
| measurement issues (C52) | portion of productivity slowdown (O49) |