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The US productivity slowdown, the baby boom, and management quality

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  • James Feyrer

Abstract

This paper examines whether management changes caused by the entry of the baby boom into the workforce explain the US productivity slowdown in the 1970s and resurgence in the 1990s. Lucas (1978) suggests that the quality of managers plays a significant role in determining output. If there is heterogeneity across workers and management skill improves with experience, an influx of young workers will lower the overall quality of management and lower total factor productivity. Census data shows that the entry of the baby boom resulted in more managers being hired from the smaller, pre baby boom cohorts. These marginal managers were necessarily of lower quality. As the boomers aged and gained experience, this effect was reversed, increasing managerial quality and raising total factor productivity. Using the Lucas model as a framework, a calibrated model of managers, workers, and firms suggests that the management effects of the baby boom may explain roughly 20 percent of the observed productivity slowdown and resurgence.
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Suggested Citation

  • James Feyrer, 2011. "The US productivity slowdown, the baby boom, and management quality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(1), pages 267-284, January.
  • Handle: RePEc:spr:jopoec:v:24:y:2011:i:1:p:267-284
    DOI: 10.1007/s00148-009-0294-z
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    Cited by:

    1. Vandenbroucke, Guillaume, 2021. "The baby boomers and the productivity slowdown," European Economic Review, Elsevier, vol. 132(C).
    2. Gui Ye & Yuhe Wang & Yuxin Zhang & Liming Wang & Houli Xie & Yuan Fu & Jian Zuo, 2019. "Impact of Migrant Workers on Total Factor Productivity in Chinese Construction Industry," Sustainability, MDPI, Open Access Journal, vol. 11(3), pages 1-18, February.
    3. Daniel Arnold, 2013. "Benefit Morale and Cross-Country Diversity in Sick Pay Entitlements," Kyklos, Wiley Blackwell, vol. 66(1), pages 27-45, February.
    4. Okoampah, Sarah, 2016. "Cohort size effects on wages, working status, and work time," Ruhr Economic Papers 629, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Beaudreau, Bernard C., 2017. "The economies of speed, KE=1/2mv2 and the productivity slowdown," Energy, Elsevier, vol. 124(C), pages 100-113.
    6. Geoffrey Dunbar & Stephen Easton, 2013. "Working parents and total factor productivity growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1431-1456, October.
    7. Wongboonsin, Kua & Phiromswad, Piyachart, 2017. "Searching for empirical linkages between demographic structure and economic growth," Economic Modelling, Elsevier, vol. 60(C), pages 364-379.
    8. Asphjell, Magne K. & Hensvik, Lena & Nilsson, J. Peter, 2013. "Businesses, Buddies, and Babies: Fertility and Social Interactions at Work," Working Paper Series, Center for Labor Studies 2013:8, Uppsala University, Department of Economics.
    9. Staley, Mark, 2018. "The Knowledge-Diffusion Bottleneck in Economic Growth and Development," MPRA Paper 87255, University Library of Munich, Germany.
    10. KODAMA Naomi & Huiyu LI, 2018. "Manager Characteristics and Firm Performance," Discussion papers 18060, Research Institute of Economy, Trade and Industry (RIETI).

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    More about this item

    Keywords

    Productivity; Demographics; Manager; O4; J1; E2;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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