The Productivity Growth Slowdown by Industry

Martin Neil Baily

Martin Neil Baily Senior Fellow Emeritus - Economic Studies, Center on Regulation and Markets

Discussants: William D. Nordhaus

WDN

William D. Nordhaus

LABOR productivity growth for the private economy as a whole seems to have stopped altogether. In the first half of 1982 the U.S. Bureau of Labor Statistics index of private sector labor productivity was below its 1977 level. Productivity has stagnated for five years. Weak aggregate demand has been an ingredient in this stagnation, but cannot account for much of it. Even in the 1930s there was only a four-year stagnation of productivity accompanying a much more severe fall in demand. By 1934, productivity was above its 1929 level. This paper is part of a continuing research project to understand and explain the slowdown. In earlier work I looked at the aggregate picture. I In this paper I report on the behavior of productivity at the industry level-the major industry groups and the two-digit manufacturing industries. In future work I will analyze the behavior of individual firms and establishments.