IDEAS home Printed from https://ideas.repec.org/h/rba/rbaacv/acv1995-08.html
   My bibliography  Save this book chapter

Problems in the Measurement and Performance of Service-Sector Productivity in the United States

In: Productivity and Growth

Author

Listed:
  • Robert Gordon

    (Northwestern University)

Abstract

Not only has U.S. productivity been poor by international standards but it is highly heterogeneous at the disaggregated industry level. Manufacturing has continued to do well while nonmanufacturing has done poorly, especially the services. Within services, apparel retailing has done well while food retailing has done badly; railroad productivity has accelerated while airline productivity has decelerated. This dispersion of performance argues against a single over-arching explanation of the slowdown. The recent shift to chain- weighted productivity measures substantially increases the magnitude of the U.S productivity slowdown and shifts it later in time. Performance in the 1970s is better than previously thought, while performance in the 1990s has been substantially worse. In addition, productivity performance in each decade has been understated due to an upward bias in the Consumer Price Index This 'CPI bias' has led to an uneven understatement of productivity change, with major errors in manufacturing, trade, and some services. The paper emphasizes two substantive causes of the productivity slowdown that go beyond measurement errors. First, some industries (e.g. electric utilities and airlines) reached a technological frontier in which the sources of earlier rapid productivity growth were exhausted. Second, slow productivity growth in food retailing and some service industries reflects a feedback from the weak bargaining position of U.S. labor. Weak unions, a falling real minimum wage, and immigration have combined to keep real wages in U.S. service industries relatively low, and this encourages overhiring by the standards of some other industrial nations.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Robert Gordon, 1995. "Problems in the Measurement and Performance of Service-Sector Productivity in the United States," RBA Annual Conference Volume,in: Palle Andersen & Jacqueline Dwyer & David Gruen (ed.), Productivity and Growth Reserve Bank of Australia.
  • Handle: RePEc:rba:rbaacv:acv1995-08
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/confs/1995/pdf/gordon.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. Robert Ford & Pierre Poret, 1991. "Infrastructure and Private-Sector Productivity," OECD Economics Department Working Papers 91, OECD Publishing.
    3. Zvi Griliches, 1998. "Productivity, R&D, and the Data Constraint," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 347-374 National Bureau of Economic Research, Inc.
    4. Martin Neil Baily & Robert J. Gordon, 1988. "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 347-432.
    5. W. Erwin Diewert, 1995. "Price and Volume Measures in the System of National Accounts," NBER Working Papers 5103, National Bureau of Economic Research, Inc.
    6. Gordon, Robert J, 1995. "Is There a Trade-off between Unemployment and Productivity Growth?," CEPR Discussion Papers 1159, C.E.P.R. Discussion Papers.
    7. Zvi Griliches, 1992. "Introduction to "Output Measurement in the Service Sectors"," NBER Chapters,in: Output Measurement in the Service Sectors, pages 1-22 National Bureau of Economic Research, Inc.
    8. Diewert, Erwin, 2007. "Index Numbers," Economics working papers diewert-07-01-03-08-17-23, Vancouver School of Economics, revised 31 Jan 2007.
    9. Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, number gril92-1.
    10. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roy H. Webb, 1998. "National productivity statistics," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 45-64.
    2. Patrick Francois & Joanne Roberts, 2003. "Contracting Productivity Growth," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 59-85.
    3. Rafael Gomez & David K. Foot, 2003. "Age Structure, Income Distribution and Economic Growth," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 141-162, January.
    4. Mary Gregory & Giovanni Russo, 2004. "The Employment Impact of Differences in Dmand and Production," DEMPATEM Working Papers wp10, AIAS, Amsterdam Institute for Advanced Labour Studies.
    5. Charles Steindel, 1997. "Measuring economic activity and economic welfare: what are we missing?," Research Paper 9732, Federal Reserve Bank of New York.
    6. Vicente Esteve, 2004. "Política fiscal y productividad del trabajo en la economía española: un análisis de series temporales," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 19(1), pages 3-29, June.
    7. John Haltiwanger, 1997. "Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence," Review, Federal Reserve Bank of St. Louis, issue May, pages 55-78.
    8. Wachter, Till von, 2001. "Employment and productivity growth in service and manufacturing sectors in France, Germany and the US," Working Paper Series 0050, European Central Bank.
    9. Bozena Kaderabkova, 2016. "Development of the economic cycle on labour market in the national economy and industry of the Czech Republi," Proceedings of Business and Management Conferences 4407037, International Institute of Social and Economic Sciences.
    10. Božena Kadeřábková & Emilie Jašová, 2011. "Analýza ukazatele NAIRU na sektorové úrovni
      [Analysis of the Indicator NAIRU on the Sector Level]
      ," Politická ekonomie, University of Economics, Prague, vol. 2011(4), pages 508-525.
    11. Cassou, Steven P. & Lansing, Kevin J., 1998. "Optimal fiscal policy, public capital, and the productivity slowdown," Journal of Economic Dynamics and Control, Elsevier, vol. 22(6), pages 911-935, June.
    12. Andreas Breitenfellner & Antje Hildebrandt, 2006. "High Employment with Low Productivity? The Service Sector as a Determinant of Economic Development," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 110-135.
    13. Messina, Julian, 2006. "The role of product market regulations in the process of structural change," European Economic Review, Elsevier, vol. 50(7), pages 1863-1890, October.
    14. Andrew J. Filardo, 1997. "Cyclical implications of the declining manufacturing employment share," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 63-87.
    15. David, P.A., 2000. "Understanding Digital Technology's Evolution and the Path of Measured Productivity Growth: Present and Future in the Mirror of the Past," Papers 99-011, United Nations World Employment Programme-.
    16. Pelaez, Rolando F., 2004. "Dating the productivity slowdown with a structural time-series model," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(2), pages 253-264, May.
    17. Sultan, Muyed, 2008. "The Tertiary Sector Is Going to Dominate the World Economy; Should We Worry?," MPRA Paper 14681, University Library of Munich, Germany.
    18. Soledad Núñez & Miguel Pérez, 2000. "La rama de servicios en España: un análisis comparado," Working Papers 0007, Banco de España;Working Papers Homepage.
    19. Areendam Chanda & Carl-Johan Dalgaard, 2005. "Wage Inequality and the Rise of Services," DEGIT Conference Papers c010_016, DEGIT, Dynamics, Economic Growth, and International Trade.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rba:rbaacv:acv1995-08. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paula Drew). General contact details of provider: http://edirc.repec.org/data/rbagvau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.