IDEAS home Printed from https://ideas.repec.org/p/fip/fednsr/122.html
   My bibliography  Save this paper

Productivity: what is it and why do we care about it?

Author

Listed:
  • Charles Steindel
  • Kevin J. Stiroh

Abstract

Economists, business analysts, and policymakers have all focused considerable attention on U.S. productivity growth in recent years. This paper presents a broad overview of productivity--both labor and total factor--and discusses why it is such an important topic. We begin with the official U.S. productivity statistics prepared by the U.S. Bureau of Labor Statistics and discuss several stylized facts. We show how productivity relates to critically important variables like long-run growth, living standards, and inflation. We then describe the proximate factors that determine labor productivity using a standard growth accounting framework. Finally, we outline a series of unresolved productivity issues that have direct implications for the future of the U.S. economy.

Suggested Citation

  • Charles Steindel & Kevin J. Stiroh, 2001. "Productivity: what is it and why do we care about it?," Staff Reports 122, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:122
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr122.html
    Download Restriction: no
    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr122.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel E. Sichel, 2000. "The Productivity Slowdown: Is A Growing Unmeasurable Sector The Culprit?," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 367-370, August.
    2. 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.
    3. 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.
    4. William D. Nordhaus, 2002. "Productivity Growth and the New Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 211-265.
    5. Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August.
    6. Lawrence Slifman & Carol Corrado, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May.
    7. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    8. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    9. Norsworthy, J R & Malmquist, David H, 1983. "Input Measurement and Productivity Growth in Japanese and U.S. Manufacturing," American Economic Review, American Economic Association, vol. 73(5), pages 947-967, December.
    10. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    11. Charles Steindel, 1999. "The impact of reduced inflation estimates on real output and productivity growth," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Jun).
    12. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    13. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    14. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 175-191, April.
    15. W. Erwin Diewert & Kevin J. Fox, 1999. "Can measurement error explain the productivity paradox?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 251-280, April.
    16. repec:fth:harver:1487 is not listed on IDEAS
    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. Hal R. Varian, 2001. "High-technology industries and market structure," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 65-101.
    2. Oliner, Stephen D. & Sichel, Daniel E., 2003. "Information technology and productivity: where are we now and where are we going?," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 477-503, July.
    3. Fernandes, Ana M., 2007. "Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries," Journal of International Economics, Elsevier, vol. 71(1), pages 52-71, March.
    4. Rajiv D. Banker & Hsihui Chang & Ram Natarajan, 2005. "Productivity Change, Technical Progress, and Relative Efficiency Change in the Public Accounting Industry," Management Science, INFORMS, vol. 51(2), pages 291-304, February.
    5. Anagaw Derseh Mebratie & Arjun S. Bedi, 2013. "Foreign direct investment, black economic empowerment and labour productivity in South Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(1), pages 103-128, February.
    6. Rohman, Ibrahim Kholilul, 2013. "The globalization and stagnation of the ICT sectors in European countries: An input-output analysis," Telecommunications Policy, Elsevier, vol. 37(4), pages 387-399.
    7. Iftekhar Hasan & Nada Kobeissi & Liuling Liu & Haizhi Wang, 2018. "Corporate Social Responsibility and Firm Financial Performance: The Mediating Role of Productivity," Journal of Business Ethics, Springer, vol. 149(3), pages 671-688, May.
    8. Oliner, Stephen D. & Sichel, Daniel E., 2005. "Les technologies de l’information et la productivité : situation actuelle et perspectives d’avenir," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 339-400, Mars-Juin.
    9. Rohman, Ibrahim Kholilul & Bohlin, Erik, 2010. "On the ICT Economy in the European Countries: Investigating the Contribution of the ICT Sectors Using the Input-Output Model," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 29, International Telecommunications Society (ITS).
    10. Bulan, Laarni & Sanyal, Paroma & Yan, Zhipeng, 2010. "A few bad apples: An analysis of CEO performance pay and firm productivity," Journal of Economics and Business, Elsevier, vol. 62(4), pages 273-306, July.
    11. 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.

    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. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    2. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Growth of US Industries and Investments in Information Technology and Higher Education," NBER Chapters, in: Measuring Capital in the New Economy, pages 403-478, National Bureau of Economic Research, Inc.
    3. McGuckin, Robert H & Stiroh, Kevin J, 2001. "Do Computers Make Output Harder to Measure?," The Journal of Technology Transfer, Springer, vol. 26(4), pages 295-321, October.
    4. Oliner, Stephen D. & Sichel, Daniel E. & Stiroh, Kevin J., 2008. "Explaining a productive decade," Journal of Policy Modeling, Elsevier, vol. 30(4), pages 633-673.
    5. Nuria Quella, 2006. "Intra- and Inter-sectoral Knowledge Spillovers and TFP Growth Rates," 2006 Meeting Papers 431, Society for Economic Dynamics.
    6. Richard Lipsey & Kenneth Carlaw, 2004. "Total factor productivity and the measurement of technological change," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 1118-1150, November.
    7. Patrick Musso, 2006. "Capital Obsolescence, Growth Accounting and Total Factor Productivity," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 217-233.
    8. Kenneth I. Carlaw & Richard G. Lipsey, 2003. "Productivity, Technology and Economic Growth: What is the Relationship?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 457-495, July.
    9. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    10. Carol Corrado & Charles Hulten & Daniel Sichel, 2009. "Intangible Capital And U.S. Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 661-685, September.
    11. Barry P. Bosworth & Jack E. Triplett, 2007. "Services Productivity in the United States: Griliches's Services Volume Revisited," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 413-447, National Bureau of Economic Research, Inc.
    12. Hulten, Charles R., 2010. "Growth Accounting," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 987-1031, Elsevier.
    13. Lafond, François & Goldin, Ian & Koutroumpis, Pantelis & Winkler, Julian, 2022. "Why is productivity slowing down?," INET Oxford Working Papers 2022-08, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    14. Nuria Quella, 2009. "Knowledge Spillovers and TFP Growth Rates," Department of Economics Working Papers 09-03, Stony Brook University, Department of Economics.
    15. Oulton, Nicholas, 2004. "A statistical framework for the analysis of productivity and sustainable development," LSE Research Online Documents on Economics 19963, London School of Economics and Political Science, LSE Library.
    16. Edquist, Harald & Henrekson, Magnus, 2017. "Do R&D and ICT affect total factor productivity growth differently?," Telecommunications Policy, Elsevier, vol. 41(2), pages 106-119.
    17. Alexius, Annika & Carlsson, Mikael, 2001. "Measures of Technology and the Business Cycle: Evidence from Sweden and the U.S," Working Paper Series 174, Trade Union Institute for Economic Research.
    18. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc.
    19. Goldin, Ian & Koutroumpis, Pantelis & Lafond, François & Winkler, Julian, 2020. "Why is productivity slowing down?," MPRA Paper 99172, University Library of Munich, Germany.
    20. John G. Fernald & Shanthi Ramnath, 2004. "The acceleration in U.S. total productivity after 1995: the role of information technology," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 28(Q I), pages 52-67.

    More about this item

    Keywords

    Productivity; Labor productivity; Technology;
    All these keywords.

    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:fip:fednsr:122. 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: https://edirc.repec.org/data/frbnyus.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 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: (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    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.