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The consequences of U.S. technology changes for productivity in advanced economies

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  • Elstner, Steffen
  • Rujin, Svetlana

Abstract

Since at least the mid-2000's, many advanced economies have experienced low productivity growth. This development is often related to the declining productivity gains at the technology frontier, which is commonly assumed to be determined by the U.S. We challenge this explanation by studying the effects of changes in U.S. technology on the productivity level in other advanced economies. Overall, we find positive but small spillover effects of U.S. technology shocks. The elasticity of foreign labor productivity with respect to a one percent increase in the U.S. technology level is significantly lower than one for many countries. The recent U.S. productivity slowdown, therefore, had a limited effect on productivity developments in advanced economies. Furthermore, our results suggest that institutional factors are not able to explain cross-country differences in the size of the spillover effects. If any, regulation of the service sector seems to play a role.

Suggested Citation

  • Elstner, Steffen & Rujin, Svetlana, 2019. "The consequences of U.S. technology changes for productivity in advanced economies," Ruhr Economic Papers 796, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:796
    DOI: 10.4419/86788924
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    Cited by:

    1. Dieppe, Alistair & Francis, Neville & Kindberg-Hanlon, Gene, 2021. "Technology and demand drivers of productivity dynamics in developed and emerging market economies," Working Paper Series 2533, European Central Bank.
    2. Rujin, Svetlana, 2019. "What are the effects of technology shocks on international labor markets?," Ruhr Economic Papers 806, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Dieppe, Alistair & Francis, Neville & Kindberg-Hanlon, Gene, 2021. "Technological and non-technological drivers of productivity dynamics in developed and emerging market economies," Journal of Economic Dynamics and Control, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    labor productivity; international spillover effects; technology shocks; structural VARs;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F00 - International Economics - - General - - - General

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