Is the recent productivity boom over?
Productivity growth has been quite strong over the past 2½ years, despite a drop in the second quarter of 2010. Many analysts believe that productivity growth must slow sharply in order for the labor market to recover robustly. However, looking at the observable factors underlying recent productivity growth and the patterns of productivity over past recessions and recoveries, a sharp slowdown appears unlikely. ; This Economic Letter examines the risks to this forecast, first looking at how productivity growth has fared in past recessions and recoveries. Then it considers where recent gains have come from. For example, do they reflect more physical capital relative to labor hours, increases in labor quality, or efficiency gains? The findings suggest that productivity growth for the next year or so might very well exceed forecaster expectations, which would put a damper on employment gains.
Volume (Year): (2010)
Issue (Month): sep20 ()
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