The Early 21st Century U.S. Productivity Expansion is Still in Services

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The Early 21st Century U.S. Productivity Expansion is Still in Services

Author Info

Barry P. Bosworth
Jack E. Triplett

Abstract

Labour productivity in the U.S. non-farm business sector grew two and a half per cent per year during the 1995-2005 period, nearly double its growth rate over the previous two decades. Services sector labour productivity (LP) and multifactor productivity (MFP) grew more rapidly and substantially exceeded productivity accelerations in the goods sector. We show that the services sector accounted for three-quarters of U.S. MFP growth after 1995, and within services the contribution of MFP to LP growth exceeded the vaunted contribution of IT investment. We also find that the services sector has become even more important as the primary source of sustained productivity growth after 2000. In this study, we compute LP, MFP and contributions to growth accounts for 57 industries within the goods and services sectors, using the new NAICS-based data set. We also show that resource reallocations, which are a newly important factor in productivity analysis, have changed the relation between increases in industry productivity growth rates and aggregate and sector growth rates in surprising ways.

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Publisher Info
Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 14 (2007)
Issue (Month): (Spring)
Pages: 3-19
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:sls:ipmsls:v:14:y:2007:1

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Find related papers by JEL classification:
E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth
F00 - International Economics - - General - - - General
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

References listed on IDEAS
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Thomas N. Hubbard, 2003. "Information, Decisions, and Productivity: On-Board Computers and Capacity Utilization in Trucking," American Economic Review, American Economic Association, vol. 93(4), pages 1328-1353, September. [Downloadable!]
Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The case of the missing productivity growth: or, does information technology explain why productivity accelerated in the United States but not the United Kingdom?," Working Paper Series WP-03-08, Federal Reserve Bank of Chicago. [Downloadable!]
Other versions:
- Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information technology explain why productivity accelerated in the United States but not the United Kingdom?," Harvard Institute of Economic Research Working Papers 2021, Harvard - Institute of Economic Research. [Downloadable!]
Susanto Basu & John Fernald, 2007. "Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data," German Economic Review, Blackwell Publishing, vol. 8, pages 146-173, 05. [Downloadable!] (restricted)
Other versions:
- Susanto Basu & John Fernald, 2006. "Information and communications technology as a general-purpose technology: evidence from U.S industry data," Working Paper Series 2006-29, Federal Reserve Bank of San Francisco. [Downloadable!]
- Susanto Basu & John G. Fernald, 2008. "Information and communications technology as a general purpose technology: evidence from U.S. industry data," Economic Review, Federal Reserve Bank of San Francisco, pages 1-15. [Downloadable!]
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Other versions:
- Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York. [Downloadable!]
Susanto Basu & John G. Fernald & Nicholas Oulton, 2004. "The Case of the Missing Productivity Growth, or Does Information Technology Explain Why Productivity Accelerated in the United States But Not in the United Kingdom?," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 9-82 National Bureau of Economic Research, Inc. [Downloadable!]
Griliches, Zvi, 1994. "Productivity, R&D, and the Data Constraint," American Economic Review, American Economic Association, vol. 84(1), pages 1-23, March.
Other versions:
- Zvi Griliches, 1998. "Productivity, R&D, and the Data Constraint," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 347-374 National Bureau of Economic Research, Inc. [Downloadable!]
Susanto Basu & Robert Inklaar & J. Christina Wang, 2008. "The value of risk: measuring the service output of U. S. commercial banks," Working Papers 08-4, Federal Reserve Bank of Boston. [Downloadable!]
Other versions:
- Susanto Basu & Robert Inklaar & J. Christina Wang, 2008. "The Value of Risk: Measuring the Service Output of U.S. Commercial Banks," NBER Working Papers 14615, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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