IDEAS home Printed from https://ideas.repec.org/p/ecl/harjfk/rwp18-002.html
   My bibliography  Save this paper

Recent US Manufacturing Employment: The Exception that Proves the Rule

Author

Listed:
  • Lawrence, Robert Z.

    (Harvard University)

Abstract

This Working Paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities. While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.

Suggested Citation

  • Lawrence, Robert Z., 2018. "Recent US Manufacturing Employment: The Exception that Proves the Rule," Working Paper Series rwp18-002, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp18-002
    as

    Download full text from publisher

    File URL: https://research.hks.harvard.edu/publications/getFile.aspx?Id=1614
    Download Restriction: no

    References listed on IDEAS

    as
    1. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
    2. Robert Z. Lawrence & Lawrence Edwards, 2013. "US Employment Deindustrialization: Insights from History and the International Experience," Policy Briefs PB13-27, Peterson Institute for International Economics.
    3. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2018. "How Fast are Semiconductor Prices Falling?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 679-702, September.
    4. Pablo D. Fajgelbaum & Amit K. Khandelwal, 2016. "Measuring the Unequal Gains from Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 131(3), pages 1113-1180.
    5. Lee Branstetter & Daniel Sichel, 2017. "The Case for an American Productivity Revival," Policy Briefs PB17-26, Peterson Institute for International Economics.
    6. Kiminori Matsuyama, 2009. "Structural Change in an Interdependent World: A Global View of Manufacturing Decline," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 478-486, 04-05.
    7. Dave Byrne & Carol Corrado, 2017. "ICT Prices and ICT Services: What Do They Tell Us About Productivity and Technology," International Productivity Monitor, Centre for the Study of Living Standards, vol. 33, pages 150-181, Fall.
    8. William Nordhaus, 2005. "The Sources of the Productivity Rebound and the Manufacturing Employment Puzzle," NBER Working Papers 11354, National Bureau of Economic Research, Inc.
    9. Timo Boppart, 2014. "Structural Change and the Kaldor Facts in a Growth Model With Relative Price Effects and Non‐Gorman Preferences," Econometrica, Econometric Society, vol. 82, pages 2167-2196, November.
    10. Martin Neil Baily & Barry P. Bosworth, 2014. "US Manufacturing: Understanding Its Past and Its Potential Future," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 3-26, Winter.
    11. Lawrence Edwards & Robert Z. Lawrence, 2013. "Rising Tide: Is Growth in Emerging Economies Good for the United States?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 5003, July.
    12. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
    13. Dale W. Jorgenson, 2001. "Information Technology and the U. S. Economy," Harvard Institute of Economic Research Working Papers 1911, Harvard - Institute of Economic Research.
    14. Martin Neil Baily & James Manyika & Shalabh Gupta, 2013. "U.S. Productivity Growth: An Optimistic Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 3-12, Spring.
    15. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 5(1), pages 3-34.
    16. Martin Feldstein, 2017. "Underestimating the Real Growth of GDP, Personal Income, and Productivity," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 145-164, Spring.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    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:ecl:harjfk:rwp18-002. 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: (). General contact details of provider: http://edirc.repec.org/data/ksharus.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.