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Recent US Manufacturing Employment: The Exception that Proves the Rule

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  • Robert Z. Lawrence

    () (Peterson Institute for International Economics)

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

  • Robert Z. Lawrence, 2017. "Recent US Manufacturing Employment: The Exception that Proves the Rule," Working Paper Series WP17-12, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp17-12
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    More about this item

    Keywords

    Trade Adjustment Costs; Inequality; Income Distribution;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • 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
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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