IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/13039.html

Why Has Economic Growth Slowed When Innovation Appears To Be Accelerating?

Author

Listed:
  • Gordon, Robert J.

Abstract

U. S. economic growth slowed by more than half from 3.2 percent per year during 1970-2006 to only 1.4 percent during 2006-16, and this decline was divided equally between slower growth in hours of work and slower growth in output per hour. In explaining slower growth in hours, particular emphasis is placed on the slower secular rise of life expectancy in the U.S. compared to other developed countries. Further contributions to slowing growth are made by a decline in the population share of both legal and illegal immigration and a turnaround from rising to declining labor force participation. Causes of declining productivity growth begin with the slowdown in the rate of increase of educational attainment. Why did productivity growth decline after 2006 despite an increase in the rate at which new U.S. patents were issued in 2006-16 compared to earlier decades? Part of the slowdown is attributed to the maturity of the IT revolution, which also helps to explain the trajectory of the college wage premium. Aspects of the productivity growth slowdown include the declining productivity of research workers, diminishing returns to drug innovation, and the evolutionary rather than revolutionary impact of robots and artificial intelligence.

Suggested Citation

  • Gordon, Robert J., 2018. "Why Has Economic Growth Slowed When Innovation Appears To Be Accelerating?," CEPR Discussion Papers 13039, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13039
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP13039
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544, December.
    2. Nicholas Bloom & Charles I. Jones & John Van Reenen & Michael Webb, 2020. "Are Ideas Getting Harder to Find?," American Economic Review, American Economic Association, vol. 110(4), pages 1104-1144, April.
    3. Robert G. Valletta, 2018. "Recent Flattening in the Higher Education Wage Premium: Polarization, Skill Downgrading, or Both?," NBER Chapters, in: Education, Skills, and Technical Change: Implications for Future US GDP Growth, pages 313-342, National Bureau of Economic Research, Inc.
    4. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    5. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
    6. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    7. Anne Case & Angus Deaton, 2017. "Mortality and Morbidity in the 21st Century," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 397-476.
    8. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    9. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
    10. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Appendix to "Distributional National Accounts: Methods and Estimates for the United States"," Working Papers halshs-02794330, HAL.
    11. Stephanie Aaronson & Tomaz Cajner & Bruce Fallick & Felix Galbis-Reig & Christopher Smith & William Wascher, 2014. "Labor Force Participation: Recent Developments and Future Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 197-275.
    12. Fatih Guvenen & Raymond J. Mataloni Jr. & Dylan G. Rassier & Kim J. Ruhl, 2022. "Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share," American Economic Review, American Economic Association, vol. 112(6), pages 1848-1884, June.
    13. Timothy Bresnahan & Pai-Ling Yin, 2017. "Adoption of New Information and Communications Technologies in the Workplace Today," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 95-124.
    14. Bloom, Nicholas & Jones, Charles I & Reenen, John Van & Webb, Michael, 2017. "Are ideas getting harder to find?," LSE Research Online Documents on Economics 86588, London School of Economics and Political Science, LSE Library.
    15. Chad Syverson, 2017. "Challenges to Mismeasurement Explanations for the US Productivity Slowdown," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 165-186, Spring.
    16. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
    17. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    18. Jaison R. Abel & Richard Deitz & Yaquin Su, 2014. "Are recent college graduates finding good jobs?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 20.
    19. Raymond Mataloni & Kim Ruhl & Dylan Rassier & Fatih Guvenen, 2016. "Offshore Profit Shifting and Domestic Productivity Measurement," 2016 Meeting Papers 1382, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert J. Gordon, 2018. "Why Has Economic Growth Slowed When Innovation Appears to be Accelerating?," NBER Working Papers 24554, National Bureau of Economic Research, Inc.
    2. Gordon, Robert J., 2018. "Declining American economic growth despite ongoing innovation," Explorations in Economic History, Elsevier, vol. 69(C), pages 1-12.
    3. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    4. Alexander Murray, 2017. "What Explains the Post-2004 U.S.Productivity Slowdown?," CSLS Research Reports 2017-05, Centre for the Study of Living Standards.
    5. Erik Brynjolfsson & Daniel Rock & Chad Syverson, 2018. "Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics," NBER Chapters, in: The Economics of Artificial Intelligence: An Agenda, pages 23-57, National Bureau of Economic Research, Inc.
    6. Stefan Schweikl & Robert Obermaier, 2020. "Lessons from three decades of IT productivity research: towards a better understanding of IT-induced productivity effects," Management Review Quarterly, Springer, vol. 70(4), pages 461-507, November.
    7. Randal K. Quarles, 2018. "An Assessment of the U.S. Economy : a speech at \"Promoting Sustained Growth: Policy Tensions and Risks\" 34th Annual NABE Economic Policy Conference, Washington, D.C., February 26, 2018," Speech 990, Board of Governors of the Federal Reserve System (U.S.).
    8. Biolsi, Christopher, 2021. "Labor productivity forecasts based on a Beveridge–Nelson filter: Is there statistical evidence for a slowdown?," Journal of Macroeconomics, Elsevier, vol. 69(C).
    9. Janice C. Eberly & James H. Stock & Jonathan H. Wright, 2020. "The Federal Reserve's Current Framework for Monetary Policy: A Review and Assessment," International Journal of Central Banking, International Journal of Central Banking, vol. 16(1), pages 5-71, February.
    10. Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Truger, Achim & Wieland, Volker, 2019. "Den Strukturwandel meistern. Jahresgutachten 2019/20 [Dealing with Structural Change. Annual Report 2019/20]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201920.
    11. John Fernald, 2018. "Is Slow Productivity and Output Growth in Advanced Economies the New Normal?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 138-148, Fall.
    12. Boppart, Timo & Li, Huiyu, 2021. "Productivity slowdown: reducing the measure of our ignorance," CEPR Discussion Papers 16478, C.E.P.R. Discussion Papers.
    13. Anastasios Evgenidis & Apostolos Fasianos, 2025. "AI news shocks and the macroeconomy: evidence from UK patent data," IFS Working Papers W25/48, Institute for Fiscal Studies.
    14. Janice Eberly & John G. Fernald, 2022. "Jackson Hole 2022 - Reassessing Economic Constraints: Potential Output (The Impact of COVID on Productivity and Potential Output)," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, August.
    15. John G. Fernald & Huiyu Li, 2022. "The Impact of COVID on Productivity and Potential Output," Working Paper Series 2022-19, Federal Reserve Bank of San Francisco.
    16. Kritikos, Alexander S. & Schiersch, Alexander & Stiel, Caroline, 2021. "The Productivity Puzzle in Business Services," IZA Discussion Papers 14610, IZA Network @ LISER.
    17. Parteka, Aleksandra & Kordalska, Aleksandra, 2023. "Artificial intelligence and productivity: global evidence from AI patent and bibliometric data," Technovation, Elsevier, vol. 125(C).
    18. Cusolito,Ana Paula & Lederman,Daniel & Pena,Jorge O., 2020. "The Effects of Digital-Technology Adoption on Productivity and Factor Demand : Firm-level Evidence from Developing Countries," Policy Research Working Paper Series 9333, The World Bank.
    19. Naudé, Wim, 2020. "From the Entrepreneurial to the Ossified Economy: Evidence, Explanations and a New Perspective," GLO Discussion Paper Series 539, Global Labor Organization (GLO).
    20. Zuzanna Helena Zarach & Aleksandra Parteka, 2023. "Productivity effects of trade in natural resources—comparison with mechanisms of technological specialisation," The World Economy, Wiley Blackwell, vol. 46(9), pages 2684-2706, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:cpr:ceprdp:13039. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.