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Computerizing Industries and Routinizing Jobs: Explaining Trends in Aggregate Productivity

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  • Aum, Sangmin
  • Lee, Tim
  • Shin, Yongseok

Abstract

Aggregate productivity growth in the U.S. has slowed down since the 2000s. We quantify the importance of differential productivity growth across occupations and across industries, and the rise of computers since the 1980s, for the productivity slowdown. Complementarity across occupations and industries in production shrinks the relative size of those with high productivity growth, reducing their contributions toward aggregate productivity growth, resulting in its slowdown. We find that such a force, especially the shrinkage of occupations with above-average productivity growth through \routinization," was present since the 1980s. Through the end of the 1990s, this force was countervailed by the extraordinarily high productivity growth in the computer industry, of which output became an increasingly more important input in all industries (\computerization"). It was only when the computer industry's productivity growth slowed down in the 2000s that the negative effect of routinization on aggregate productivity became apparent. We also show that the decline in the labor income share can be attributed to computerization, which substitutes labor across all industries.

Suggested Citation

  • Aum, Sangmin & Lee, Tim & Shin, Yongseok, 2018. "Computerizing Industries and Routinizing Jobs: Explaining Trends in Aggregate Productivity," TSE Working Papers 18-893, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:32481
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    References listed on IDEAS

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    Cited by:

    1. Blanas, Sotiris & Gancia, Gino & Lee, Sang Yoon (Tim), 2019. "Who Is Afraid of Machines?," CEPR Discussion Papers 13802, C.E.P.R. Discussion Papers.
    2. Zsófia L. Bárány & Christian Siegel, 2019. "Engines of Sectoral Labor Productivity Growth," Studies in Economics 1901, School of Economics, University of Kent.
    3. repec:eee:moneco:v:97:y:2018:i:c:p:111-116 is not listed on IDEAS
    4. Jakub Growiec, 2019. "The Hardware-Software Model: A New Conceptual Framework of Production, R&D, and Growth with AI," Working Papers 2019-042, Warsaw School of Economics, Collegium of Economic Analysis.
    5. repec:eee:moneco:v:97:y:2018:i:c:p:22-28 is not listed on IDEAS

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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