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The Productivity Paradox in US Manufacturing: A Firm- and Industry-Level Perspective

Author

Listed:
  • Danial Lashkari
  • Jeremy Pearce

Abstract

US manufacturing productivity growth grew rapidly in the 1987–2007 period but has been nearly zero since 2010. We decompose this productivity slowdown across industries and firms and find it to be pervasive. More specifically, it appears in the initially fastest growing industries (including Computer and Electronic Products) just as in initially lagging ones, and it affects both leading and following firms within industries. This broad-based decline occurred even as R&D intensity rose, suggesting declining research effectiveness rather than reduced innovation effort. Our firm-level analysis reveals this productivity paradox operates broadly rather than being concentrated among specific firm types or industries.

Suggested Citation

  • Danial Lashkari & Jeremy Pearce, 2026. "The Productivity Paradox in US Manufacturing: A Firm- and Industry-Level Perspective," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 462-468, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:462-468
    DOI: 10.1257/pandp.20261044
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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