Working Paper: NBER ID: w24151
Authors: Robert Z. Lawrence
Abstract: This 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 other industrial economies, 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, relatively 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.\nWhile 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.
Keywords: No keywords provided
JEL Codes: D24; F16; J21; O14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Faster productivity growth (O49) | Decline in manufacturing employment shares (O14) |
| Slower productivity growth (O49) | Increase in manufacturing employment (L69) |
| Faster productivity growth (O49) | Reduced demand for labor (J23) |
| Consumer spending patterns shift towards services (D12) | Complicates employment dynamics in manufacturing (J63) |