Challenges to Mismeasurement Explanations for the U.S. Productivity Slowdown

By Chad Syverson. 2017

396 citations recorded by the source corpus.

The U.S. has been experiencing a slowdown in measured labor productivity growth since 2004. A number of commentators and researchers have suggested that this slowdown is at least in part illusory, because real output data have failed to capture the new and better products of the past decade. I conduct four disparate analyses, each of which offers empirical challenges to this “mismeasurement hypothesis.” First, the productivity slowdown has occurred in dozens of countries, and its size is unrelated to measures of the countries’ consumption or production intensities of information and communication technologies (ICTs, the type of goods most often cited as sources of mismeasurement). Second, estimates from the existing research literature of the surplus created by internet-linked digital technologies fall far short of the $2.7 trillion or more of “missing output” resulting from the productivity growth slowdown. The largest—by some distance—is less than one-third of the purportedly mismeasured GDP. Third, if measurement problems were to account for even a modest share of this missing output, the properly measured output and productivity growth rates of industries that produce and service ICTs would have to have been multiples of their measured growth in the data. Fourth, while measured gross domestic income has been on average higher than measured gross domestic product since 2004—perhaps indicating workers are being paid to make products that are given away for free or at highly discounted prices—this trend actually began before the productivity slowdown and moreover reflects unusually high capital income rather than labor income (i.e., profits are unusually high). In combination, these complementary facets of evidence suggest that the reasonable prima facie case for the mismeasurement hypothesis faces real hurdles when confronted with the data.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/fc0b363b4a8faf6b3f5cb99e1a585770ef2b9dfd

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Citations in the corpus

Assessing the Gains from E-Commerce (2019, neutral): “More recently, Syverson ( 2017 ) looks at the question of whether the observed slowdown in labor productivity growth can be explained by mismeasurement of digital goods and Information and Communications Technology ( ICT ) more generally.”
A Theory of Falling Growth and Rising Rents (2019, neutral): “Syverson (2017), Aghion, Bergeaud, Boppart, Klenow and Li (2019), and Boppart and Li (2022) contend that the slowdown is unlikely to be fully attributable to growing measurement errors.”
Artificial Intelligence, Automation, and Work (2018, neutral): “Average productivity growth rebounded to 2.8 percent between 1995 and 2004, and then fell again to only 1.3 percent between 2005 and 2015 (Syverson 2017).”
Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics (2017, neutral): “It is also widespread, having occurred throughout the many large emerging economies as well (Syverson, 2017).”
Common ownership and competition in product markets (2021, neutral): “…to the literature investigating the causes of the observed slow down in productivity in the U.S. since the early 2000’s, e.g., see Fernald (2015), Syverson (2017), etc. Attendant with this slowdown has been a substantial weakening over recent decades in the relation between corporate investment…”
Changing Business Dynamism and Productivity: Shocks vs. Responsiveness (2018, background): “Exceptions include several retail trade studies (Foster, Haltiwanger, and Krizan (2006), Jarmin, Klimek, and Miranda (2009) and Foster et al.”
GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy (2019, neutral): “5 Among others, see, for example, Feldstein (2017), Groshen et al. (2017), Hulten and Nakamura (2017), Syverson (2017), Ahmad and Schreyer (2016), Byrne, Fernald and Reinsdorf (2016), Brynjolfsson and Saunders (2009), Brynjolfsson and Oh (2012), Greenstein and McDevitt (2011), Brynjolfsson, Eggers…”
Offshore Profit Shifting and Domestic Productivity Measurement (2017, background): “Syverson (2016) and Byrne, Fernald, and Reinsdorf (2016) argue that measurement is unlikely to explain most of the productivity slowdown.”
The Fall of the Labor Share and the Rise of Superstar Firms* (2017, background): “Yet it is widely acknowledged that aggregate productivity growth in the United States and Europe slowed from the early 1970s, rebounded modestly in the mid-1990s, and then slowed again from the mid-2000s (Syverson 2017).”
Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory (2019, background): “…to be have slowed down notably (Gordon 2012; see Figure 11).11 Gordon (2016) concludes that broad-impact innovations have been depleted, which 11 Syverson (2017) and Ahmad, Ribarsky, and Reinsdorf (2017) refute the argument that the measured slowdown in aggregate productivity growth may…”