Outsourcing of Services and the Productivity Recovery in U.S. Manufacturing in the 1980s and 1990s
Manufacturing productivity growth recovered during the 1980s and 1990s, while other sectors, particularly services, did not. In the same period U.S. manufacturing has engaged in the “outsourcing” or “contracting-out” of service functions. Has the recovery of manufacturing been accomplished by industrial reorganization--sloughing off sluggish services--rather than technical progress? We analyze this question by reducing service inputs to their consituent elements of material inputs. Service productivity growth is thus imputed to the goods sectors, reducing the recovery of manufacturing productivity growth in the 1980s by one fifth. The recovery lasted through the 1990s, when high productivity performers in manufacturing have been relatively successful at outsourcing sluggishservices. Copyright Kluwer Academic Publishers 2001
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- George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185.
- Postner, Harry H, 1990. "The Contracting-Out Problem in Service Sector Analysis: Choice of Statistical Unit," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(2), pages 177-86, June.
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