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Sectoral Productivity Slowdown

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  • M. Ishaq Nadiri

Abstract

In this paper an attempt is made to answer two questions:1) What set of factors explains the recent slowdown of the U.S. aggregate labor productivity, and 2) whether the same set of forces account for the slowdown of sectoral productivity growth as well. We specify a model which relates measured labor productivity growth to capital/labor ratio, level and rate of change of utilization, stock of R & D, and the rate of disembodied technical change. The model is estimated using sectoral and aggregate data for the period 1949-1978.The results of the estimation suggest that the pattern of aggregate productivity growth can be explained by the growth of capital/labor ratio the gap between potential and actual output growth paths, the change in degree of utilization, the growth of stock of total R & D, and the time trend. In fact, both at the aggregate and sectoral levels, these factors account fairly well, first for the growth and then for the subsequent slowdown of labor productivity in the postwar period. To be sure, in some specific industries, the performance of the model could be improved. However, the overall conclusion reached is that the slowdown in growth of capital formation, the inability of the economy and various sectors to grow at their normal growth rates, and the slowdown in rate of technological change are some of the main reasons for the observed productivity slowdown of the recent years.

Suggested Citation

  • M. Ishaq Nadiri, 1980. "Sectoral Productivity Slowdown," NBER Working Papers 0423, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0423
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    File URL: http://www.nber.org/papers/w0423.pdf
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    1. Clark, Peter K, 1978. "Capital Formation and the Recent Productivity Slowdown," Journal of Finance, American Finance Association, vol. 33(3), pages 965-975, June.
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    Cited by:

    1. Antonelli, Cristiano & Krafft, Jackie & Quatraro, Francesco, 2010. "Recombinant knowledge and growth: The case of ICTs," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 50-69, March.
    2. Giersch, Herbert & Wolter, Frank, 1982. "On the recent slowdown in productivity growth in advanced economies," Kiel Working Papers 148, Kiel Institute for the World Economy (IfW).
    3. Michael Bruno, 1981. "Raw Materials, Profits, and the Productivity Slowdown (Rev)," NBER Working Papers 0660, National Bureau of Economic Research, Inc.
    4. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, Elsevier.
    5. José Miguel Benavente H., 2005. "Technological Innovation in Chile: Where we are and what can be Done," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 8(1), pages 53-77, April.
    6. Cameron, G., 1996. "Innovation and economic growth," LSE Research Online Documents on Economics 20685, London School of Economics and Political Science, LSE Library.
    7. Markus Eberhardt & Christian Helmers & Hubert Strauss, 2013. "Do Spillovers Matter When Estimating Private Returns to R&D?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 436-448, May.
    8. Jack Beebe & Jane Haltmaier, 1980. "An intersectoral analysis of the secular productivity slowdown," Economic Review, Federal Reserve Bank of San Francisco, issue Fall, pages 7-28.
    9. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1988. "Rates Of Return On Physical And R&D Capital And Structure Of The Production Process: Cross Section And Time Series Evidence," NBER Working Papers 2570, National Bureau of Economic Research, Inc.
    10. Li, Zheng & Su, Li & Zhang, Daiqiang, 2014. "Profile least squares estimation of a partially linear time trend model with weakly dependent data," Economics Letters, Elsevier, vol. 125(3), pages 404-407.
    11. Petri Rouvinen, 2002. "R&D-Productivity Dynamics: Causality, Lags, and "Dry Holes"," Journal of Applied Economics, Universidad del CEMA, vol. 5, pages 123-156, May.

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