Explaining a Productive Decade

98 Pages Posted: 15 Jul 2008

See all articles by Stephen D. Oliner

Stephen D. Oliner

American Enterprise Institute

Daniel E. Sichel

Wellesley College; NBER

Kevin J. Stiroh

Federal Reserve Bank of New York

Date Written: December 2007


This paper analyzes the sources of U.S. productivity growth in recent years using both aggregate and industry-level data. We confirm the central role for information technology (IT) in the productivity revival during 1995-2000 and show that IT played a significant, though smaller, role after 2000. Productivity growth after 2000 appears to have been boosted by industry restructuring and cost cutting in response to profit pressures, an unlikely source of future strength. In addition, the incorporation of intangible capital into the growth accounting framework takes some of the luster off the performance of labor productivity since 2000 and makes the gain during 1995-2000 look larger than in the official data. Finally, we examine the outlook for trend growth in labor productivity; our estimate, though subject to much uncertainty, is centered at 2-1/4 percent a year, faster than the lackluster pace that prevailed before 1995 but somewhat slower than the 1995-2006 average.

Keywords: Productivity, information technology, total factor productivity, sources of growth, intangible capital

JEL Classification: D24, E01, E22, O47

Suggested Citation

Oliner, Stephen D. and Sichel, Daniel E. and Stiroh, Kevin J., Explaining a Productive Decade (December 2007). FEDS Working Paper No. 2007-63, Available at SSRN: https://ssrn.com/abstract=1160248 or http://dx.doi.org/10.2139/ssrn.1160248

Stephen D. Oliner (Contact Author)

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Daniel E. Sichel

Wellesley College ( email )

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Kevin J. Stiroh

Federal Reserve Bank of New York ( email )

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