Why Construction Industry Productivity is Declining
AbstractAccording to unpublished data compiled by BLS, productivity in the construction industry reached a peak in 1968 and, except for a brief and small upturn between 1974 and 1976, has been falling ever since. This paper examines the sources of this productivity decline between 1968 and 1978 by estimating a production function to assign weights to various factors responsible for productivity change and deriving a new price deflator for construction which does not rely on labor or material cost indexes, thus eliminating a systematic bias toward overstating the rate of growth of prices.The production function analysis indicates that productivity should have declined by 8.8 percent between 1968 and 1978,representing 41 percent of the observed decline. The biggest factor in this decline was the reduction in skilled labor intensity resulting from a shift in the mix of output from largescale commercial, industrial, and institutional projects to single-family houses. Other important factors include declines in the average number of employees per establishment, capital-labor ratio, percent union, and the average age of workers. The difference between the official deflator and the new deflator proposed here accounts for an additional 51 percent of the reported productivity decline, leaving only 8 percent of the decline unexplained.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1555.
Date of creation: Feb 1985
Date of revision:
Publication status: published as Allen, Steven G. "Why Construction Industry Productivity is Declining," Review of Economics and Statistics, Vol. LXVII, No. 4, (November 1985) pp. 6 61-669.
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Allen, Steven G, 1985. "Why Construction Industry Productivity Is Declining," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 661-69, November.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ben Dolman & Dean Parham & Simon Zheng, 2007. "Can Australia Match US Productivity Performance?," Staff Working Papers 0703, Productivity Commission, Government of Australia.
- Peter Harrison, 2007. "Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?," CSLS Research Reports 2007-01, Centre for the Study of Living Standards.
- Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276 National Bureau of Economic Research, Inc.
- Centre for the Study of Living Standards, 2001. "Productivity Trends in the Construction Sector in Canada: A Case of Lagging Technical Progress," CSLS Research Reports 01cp, Centre for the Study of Living Standards.
- Steven G. Allen, 1987. "Unions and Efficiency in Private Sector Construction: Further Evidence," NBER Working Papers 2254, National Bureau of Economic Research, Inc.
- Andrew Sharpe, 2001. "Productivity Trends in the Construction Sector in Canada: A Case of Lagging Technical Progress," International Productivity Monitor, Centre for the Study of Living Standards, vol. 3, pages 52-68, Fall.
- User:Abstudio/sandbox in Wikipedia English ne '')
- Integrated project delivery in Wikipedia English ne '')
- Advanced Integrated Practice in Wikipedia English ne '')
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.