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Productivity: what is it and why do we care about it?

Author

Listed:
  • Charles Steindel
  • Kevin J. Stiroh
Abstract
Economists, business analysts, and policymakers have all focused considerable attention on U.S. productivity growth in recent years. This paper presents a broad overview of productivity--both labor and total factor--and discusses why it is such an important topic. We begin with the official U.S. productivity statistics prepared by the U.S. Bureau of Labor Statistics and discuss several stylized facts. We show how productivity relates to critically important variables like long-run growth, living standards, and inflation. We then describe the proximate factors that determine labor productivity using a standard growth accounting framework. Finally, we outline a series of unresolved productivity issues that have direct implications for the future of the U.S. economy.

Suggested Citation

  • Charles Steindel & Kevin J. Stiroh, 2001. "Productivity: what is it and why do we care about it?," Staff Reports 122, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:122
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    References listed on IDEAS

    as
    1. Daniel E. Sichel, 2000. "The Productivity Slowdown: Is A Growing Unmeasurable Sector The Culprit?," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 367-370, August.
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    6. Lawrence Slifman & Carol Corrado, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May.
    7. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
    8. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    9. Norsworthy, J R & Malmquist, David H, 1983. "Input Measurement and Productivity Growth in Japanese and U.S. Manufacturing," American Economic Review, American Economic Association, vol. 73(5), pages 947-967, December.
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    11. Charles Steindel, 1999. "The impact of reduced inflation estimates on real output and productivity growth," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Jun).
    12. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    13. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    14. Stiroh, Kevin J, 1998. "Computers, Productivity, and Input Substitution," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 175-191, April.
    15. W. Erwin Diewert & Kevin J. Fox, 1999. "Can measurement error explain the productivity paradox?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 251-280, April.
    16. repec:fth:harver:1487 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Hal R. Varian, 2001. "High-technology industries and market structure," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 65-101.
    2. Oliner, Stephen D. & Sichel, Daniel E., 2003. "Information technology and productivity: where are we now and where are we going?," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 477-503, July.
    3. Ben Lahouel, Béchir & Taleb, Lotfi & Ben Zaied, Younes & Managi, Shunsuke, 2022. "Does primary stakeholder management improve competitiveness? A dynamic network non-parametric frontier approach," Economic Modelling, Elsevier, vol. 116(C).
    4. Fernandes, Ana M., 2007. "Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries," Journal of International Economics, Elsevier, vol. 71(1), pages 52-71, March.
    5. Hasan, Iftekhar & Kobeissi, Nada & Liu, Liuling & Wang, Haizhi, 2016. "Corporate social responsibility and firm financial performance: the mediating role of productivity," Bank of Finland Research Discussion Papers 7/2016, Bank of Finland.
    6. Anagaw Derseh Mebratie & Arjun S. Bedi, 2013. "Foreign direct investment, black economic empowerment and labour productivity in South Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(1), pages 103-128, February.
    7. Khampheng KINGKHAMBANG & Bounmy INTHAKESONE & Neevanh SAYNAVONG & Phoxay PHANHONKEO & Phonexay CHANTHATHAB & Khaysy SRITHILAT, 2023. "Labor Productivity analysis in Lao PDR Case study: Garment, Furniture and food-beverage industry," International Journal of Science and Business, IJSAB International, vol. 21(1), pages 54-66.
    8. Rohman, Ibrahim Kholilul, 2013. "The globalization and stagnation of the ICT sectors in European countries: An input-output analysis," Telecommunications Policy, Elsevier, vol. 37(4), pages 387-399.
    9. Rajiv D. Banker & Hsihui Chang & Ram Natarajan, 2005. "Productivity Change, Technical Progress, and Relative Efficiency Change in the Public Accounting Industry," Management Science, INFORMS, vol. 51(2), pages 291-304, February.
    10. Iftekhar Hasan & Nada Kobeissi & Liuling Liu & Haizhi Wang, 2018. "Corporate Social Responsibility and Firm Financial Performance: The Mediating Role of Productivity," Journal of Business Ethics, Springer, vol. 149(3), pages 671-688, May.
    11. Oliner, Stephen D. & Sichel, Daniel E., 2005. "Les technologies de l’information et la productivité : situation actuelle et perspectives d’avenir," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 339-400, Mars-Juin.
    12. repec:zbw:bofrdp:2016_007 is not listed on IDEAS
    13. Rohman, Ibrahim Kholilul & Bohlin, Erik, 2010. "On the ICT Economy in the European Countries: Investigating the Contribution of the ICT Sectors Using the Input-Output Model," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 29, International Telecommunications Society (ITS).
    14. Bulan, Laarni & Sanyal, Paroma & Yan, Zhipeng, 2010. "A few bad apples: An analysis of CEO performance pay and firm productivity," Journal of Economics and Business, Elsevier, vol. 62(4), pages 273-306, July.
    15. Areendam Chanda & Carl-Johan Dalgaard, 2005. "Wage Inequality and the Rise of Services," DEGIT Conference Papers c010_016, DEGIT, Dynamics, Economic Growth, and International Trade.

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    Keywords

    Productivity; Labor productivity; Technology;
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