U.S. Total Factor Productivity Slowdown: Evidence from the U.S. States
May 28, 2015
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Summary
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.”
Subject: Human capital, Labor, Production, Productivity, Technological innovation, Technology, Total factor productivity
Keywords: growth, Human capital, Productivity, stochastic frontier analysis, Technological innovation, TFP deceleration, TFP determinant, TFP experience, TFP growth, TFP trend, Total factor productivity, total factor productivity growth, U.S. states, WP
Pages:
24
Volume:
2015
DOI:
Issue:
116
Series:
Working Paper No. 2015/116
Stock No:
WPIEA2015116
ISBN:
9781513520834
ISSN:
1018-5941
