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Why Is Manufacturing Productivity Growth So Low?

Author

Listed:
  • Enghin Atalay
  • Ali Hortaçsu
  • Nicole Kimmel
  • Chad Syverson

Abstract

We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In rapidly changing industries, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.7 percentage points in durable manufacturing and 0.4 percentage points in nondurable manufacturing, with no mismeasurement in nonmanufacturing industries.

Suggested Citation

  • Enghin Atalay & Ali Hortaçsu & Nicole Kimmel & Chad Syverson, 2025. "Why Is Manufacturing Productivity Growth So Low?," NBER Working Papers 34264, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34264
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    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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