Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Why Is Productivity Slowing Down?
Journal of Economic Literature
vol. 62,
no. 1, March 2024
(pp. 196–268)
Abstract
We examine the contribution of different explanations to the slowdown of labor productivity. Comparing the post-2005 period with the preceding decade for five advanced economies, we seek to explain a slowdown of 0.8 to 1.8 pp. No single explanation accounts for the slowdown, but we have identified a combination of factors that, taken together, account for much of what has been observed. In the countries we have studied, these are mismeasurement, a decline in the contribution of capital per worker, lower spillovers from the growth of intangible capital, the slowdown in trade, and a lower growth of allocative efficiency. Sectoral reallocation and a lower contribution of human capital may also have played a role in some countries. In addition to our quantitative assessment of explanations for the slowdown, we qualitatively assess other explanations, including whether productivity growth may be declining due to innovation slowing down.Citation
Goldin, Ian, Pantelis Koutroumpis, François Lafond, and Julian Winkler. 2024. "Why Is Productivity Slowing Down?" Journal of Economic Literature 62 (1): 196–268. DOI: 10.1257/jel.20221543Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- L16 Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence