Post-pandemic Productivity Dynamics in the United States

IMF Working Papers, June 21, 2024

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Labor productivity experienced large swings since 2020, driven by both compositional and within-industry effects, and has since returned to its pre-pandemic trend.
Industry-level panel regressions indicate measures of labor market churn are associated with higher productivity growth both in the cross-section and over time.
Sectors with higher investment in digitalization, particularly in teleworkable industries, experience higher productivity growth on average.
Business formation has increased since the pandemic, but its impact on productivity dynamics will likely need more time to be reflected in the data.

Labor market churn:
- Associated with higher productivity growth in cross-sectional comparisons.
- Associated with higher productivity growth over time within industries.
Digitalization and teleworkability:
- Higher investment in digitalization correlates with higher average productivity growth.
- Teleworkable industries show particularly strong links between digital investment and productivity gains.
Business formation:
- Increase in business formation observed since the pandemic.
- Measurable effects on aggregate productivity dynamics are expected to emerge only with additional time and data.

Analysis uses industry-level panel regressions to identify associations between productivity growth and labor market churn, digitalization investment, and other industry characteristics.
Distinctions are made between compositional effects (changes in industry shares) and within-industry effects (productivity changes inside industries).

Post-pandemic Productivity Dynamics in the United States — Mai Dao and Josef Platzer; IMF Working Paper No. 2024/124 (June 21, 2024).