IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2015-116.html
   My bibliography  Save this paper

U.S. Total Factor Productivity Slowdown: Evidence from the U.S. States

Author

Listed:
  • Mr. Roberto Cardarelli
  • Ms. Lusine Lusinyan

Abstract

Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.”

Suggested Citation

  • Mr. Roberto Cardarelli & Ms. Lusine Lusinyan, 2015. "U.S. Total Factor Productivity Slowdown: Evidence from the U.S. States," IMF Working Papers 2015/116, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/116
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42967
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Henry Hyatt & James Spletzer, 2013. "The recent decline in employment dynamics," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-21, December.
    2. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    3. 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.
    4. 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.
    5. Gasper A. Garofalo & Steven Yamarik, 2002. "Regional Convergence: Evidence From A New State-By-State Capital Stock Series," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 316-323, May.
    6. William Hauk & Romain Wacziarg, 2009. "A Monte Carlo study of growth regressions," Journal of Economic Growth, Springer, vol. 14(2), pages 103-147, June.
    7. Chad Turner & Robert Tamura & Sean Mulholland, 2013. "How important are human capital, physical capital and total factor productivity for determining state economic growth in the United States, 1840–2000?," Journal of Economic Growth, Springer, vol. 18(4), pages 319-371, December.
    8. 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.
    9. Chad Turner & Robert Tamura & Sean Mulholland & Scott Baier, 2007. "Education and income of the states of the United States: 1840–2000," Journal of Economic Growth, Springer, vol. 12(2), pages 101-158, June.
    10. Lorenzo Caliendo & Fernando Parro & Esteban Rossi-Hansberg & Pierre-Daniel Sarte, 2018. "The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 2042-2096.
    11. Paul W. Bauer & Yoonsoo Lee, 2006. "Estimating GSP and labor productivity by state," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Mar.
    12. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    13. Steven Yamarik, 2013. "State-Level Capital And Investment: Updates And Implications," Contemporary Economic Policy, Western Economic Association International, vol. 31(1), pages 62-72, January.
    14. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2013. "Is the Information Technology Revolution Over?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 20-36, Spring.
    15. Federico Belotti & Silvio Daidone & Giuseppe Ilardi & Vincenzo Atella, 2013. "Stochastic frontier analysis using Stata," Stata Journal, StataCorp LP, vol. 13(4), pages 718-758, December.
    16. Robert J. Gordon, 2013. "U.S. Productivity Growth: The Slowdown Has Returned After a Temporary Revival," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 13-19, Spring.
    17. Jerzmanowski, Michal, 2007. "Total factor productivity differences: Appropriate technology vs. efficiency," European Economic Review, Elsevier, vol. 51(8), pages 2080-2110, November.
    18. Sharma, Subhash C. & Sylwester, Kevin & Margono, Heru, 2007. "Decomposition of total factor productivity growth in U.S. states," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(2), pages 215-241, May.
    19. repec:aei:rpaper:37301 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. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2017. "The Global Productivity Slump: Common and Country-Specific Factors," Asian Economic Papers, MIT Press, vol. 16(3), pages 1-41, Fall.
    2. Boussemart, Jean-Philippe & Leleu, Hervé & Mensah, Edward & Shitikova, Karina, 2020. "Technological catching-up and structural convergence among US industries," Economic Modelling, Elsevier, vol. 84(C), pages 135-146.
    3. Ana Martins & Tiago Domingues & Catarina Branco, 2018. "The Determinants of TFP Growth in the Portuguese Service Sector," GEE Papers 0114, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Nov 2018.
    4. Åke E. Andersson & Börje Johansson, 2018. "Inside and outside the black box: organization of interdependencies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(3), pages 501-516, November.
    5. Hyun, Suk & Lee, Hyo Seob, 2022. "Positive effects of portfolio financing strategy for startups," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 623-633.
    6. Rod Tyers & Yixiao Zhou, 2018. "Automation, taxes and transfers with International rivalry," CAMA Working Papers 2018-44, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    7. To, Thomas Y. & Navone, Marco & Wu, Eliza, 2018. "Analyst coverage and the quality of corporate investment decisions," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 164-181.
    8. John O'Trakoun, 2018. "The impact of trade on growth in the Great Lakes states," Economics Bulletin, AccessEcon, vol. 38(4), pages 1845-1856.
    9. Almarina Gramozi & Theodore Palivos & Marios Zachariadis, 2020. "On the Degree and Consequences of Talent Misallocation for the United States," University of Cyprus Working Papers in Economics 09-2020, University of Cyprus Department of Economics.
    10. Germana Giombini & Francesco Perugini & Giuseppe Travaglini, 2017. "The productivity slowdown puzzle of European countries: a focus on Italy," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 6(6), pages 1-20, January-A.
    11. Alexander Murray, 2017. "What Explains the Post-2004 U.S.Productivity Slowdown?," CSLS Research Reports 2017-05, Centre for the Study of Living Standards.
    12. Makram El‐Shagi & Steven Yamarik, 2019. "State‐level capital and investment: Refinements and update," Growth and Change, Wiley Blackwell, vol. 50(4), pages 1411-1422, December.
    13. V. S. Vasiliev, 2018. "The Deterioration of Reproduction Conditions in the U.S. Economy," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 11(2).
    14. Capello, Roberta & Lenzi, Camilla & Perucca, Giovanni, 2022. "The modern Solow paradox. In search for explanations," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 166-180.
    15. Roberta Santis & Piero Esposito & Elena Masi, 2019. "Structural determinants of potential output growth in Europe and the role of fiscal policy," International Economics and Economic Policy, Springer, vol. 16(4), pages 565-591, October.
    16. Francisco Rodrigues & Nuno Tavares & Gabriel Osório Barros, 2021. "Drivers of exceptional job creation – a dynamic probit approach using portuguese firm-level data," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(1), pages 45-69, January.
    17. Tsionas, Mike G. & Polemis, Michael L., 2019. "On the estimation of total factor productivity: A novel Bayesian non-parametric approach," European Journal of Operational Research, Elsevier, vol. 277(3), pages 886-902.
    18. Rod Tyers & Yixiao Zhou, 2023. "The Tech War: Distributional Consequences Of International Rivalry," Economics Discussion / Working Papers 23-07, The University of Western Australia, Department of Economics.
    19. Schnabl Gunther, 2020. "Soziale Marktwirtschaft damals und heute," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(1), pages 1-24, May.
    20. Wroński Marcin, 2019. "The productivity growth slowdown in advanced economies: causes and policy recommendations," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 55(4), pages 391-406, December.
    21. Viktor Dementiev, 2019. "Productivity Paradox in Regional Dimension," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 43-56.
    22. Schnabl, Gunther, 2018. "70 years after the German currency and economic reform: The monetary, economic and political order in Europe is disturbed," Working Papers 156, University of Leipzig, Faculty of Economics and Management Science.
    23. Rod Tyers & Yixiao Zhou, 2022. "A Bamboo Curtain: The Grim Australian Consequences of China Conflict," Economics Discussion / Working Papers 22-20, The University of Western Australia, Department of Economics.

    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. Areendam Chanda & Bibhudutta Panda, 2016. "Productivity Growth In Goods And Services Across The Heterogeneous States Of America," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1021-1045, April.
    2. Bibhudutta Panda, 2017. "Schooling and productivity growth: evidence from a dual growth accounting application to U.S. states," Journal of Productivity Analysis, Springer, vol. 48(2), pages 193-221, December.
    3. Fabiano Schivardi & Tom Schmitz, 2020. "The IT Revolution and Southern Europe’s Two Lost Decades [Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2441-2486.
    4. Jorgenson, Dale W. & Ho, Mun S. & Samuels, Jon D., 2016. "The impact of information technology on postwar US economic growth," Telecommunications Policy, Elsevier, vol. 40(5), pages 398-411.
    5. Makram El‐Shagi & Steven Yamarik, 2019. "State‐level capital and investment: Refinements and update," Growth and Change, Wiley Blackwell, vol. 50(4), pages 1411-1422, December.
    6. Michael L. Polemis & Mike G. Tsionas, 2022. "Endogenous productivity: a new Bayesian perspective," Annals of Operations Research, Springer, vol. 318(1), pages 425-451, November.
    7. Ursel Baumann & Melina Vasardani, 2016. "The slowdown in US productivity growth - what explains it and will it persist?," Working Papers 215, Bank of Greece.
    8. Alexander Murray, 2017. "What Explains the Post-2004 U.S.Productivity Slowdown?," CSLS Research Reports 2017-05, Centre for the Study of Living Standards.
    9. John O'Trakoun, 2018. "The impact of trade on growth in the Great Lakes states," Economics Bulletin, AccessEcon, vol. 38(4), pages 1845-1856.
    10. Dale W. Jorgenson & Mun S. Ho & Jon D. Samuels, 2017. "Educational Attainment and the Revival of US Economic Growth," NBER Chapters, in: Education, Skills, and Technical Change: Implications for Future US GDP Growth, pages 23-60, National Bureau of Economic Research, Inc.
    11. Herkenhoff, Kyle F. & Ohanian, Lee E. & Prescott, Edward C., 2018. "Tarnishing the golden and empire states: Land-use restrictions and the U.S. economic slowdown," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 89-109.
    12. Castiglione, Concetta & Infante, Davide, 2014. "ICTs and time-span in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms," Economic Modelling, Elsevier, vol. 41(C), pages 55-65.
    13. Greenstein, Shane & Nagle, Frank, 2014. "Digital dark matter and the economic contribution of Apache," Research Policy, Elsevier, vol. 43(4), pages 623-631.
    14. Russ Kashian & Nicholas Lovett & Yuhan Xue, 2020. "Has the affordable care act affected health care efficiency?," Journal of Regulatory Economics, Springer, vol. 58(2), pages 193-233, December.
    15. Decker, Ryan A. & Haltiwanger, John & Jarmin, Ron S. & Miranda, Javier, 2016. "Where has all the skewness gone? The decline in high-growth (young) firms in the U.S," European Economic Review, Elsevier, vol. 86(C), pages 4-23.
    16. 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.
    17. Frank Nagle, 2019. "Open Source Software and Firm Productivity," Management Science, INFORMS, vol. 65(3), pages 1191-1215, March.
    18. Bergeaud, A. & Cette, G. & Lecat, R., 2015. "Productivity trends from 1890 to 2012 in advanced countries," Rue de la Banque, Banque de France, issue 07, June..
    19. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    20. Cette, G., 2014. "Does ICT remain a powerful engine of growth?," Working papers 476, Banque de France.

    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:imf:imfwpa:2015/116. 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: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    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.