Academic journal article Monthly Labor Review

Raising Productivity

Academic journal article Monthly Labor Review

Raising Productivity

Article excerpt

As has been the case in the past, productivity growth slowed at the beginning of the 2001 recession and sped up again once the recession was over, according to a recent report in the Current Issues in Economics and Finance series published by the Federal Reserve Bank of New York. But, note authors Dale W. Jorgenson, Mun S. Ho, and Kevin J. Stiroh, "the drop-off in productivity in 2001 was not as large as it had been in earlier recessions and the productivity recovery was much stronger." As they are quick to point out, this created some problems for business cycle analysts who had to deal with the differing trends in output and employment growth as they sought to identify the trough of the recession.

Using the standard techniques of growth accounting, Jorgenson, Ho, and Stiroh attribute much of the recent vigorous growth in productivity to accelerated capital deepening attributable to information technology and to a rebound in the rate of total factor productivity growth to about the rate that was recorded in the 1960s and very early 1970s. The rebound in total factor productivity itself reflected a disproportionate contribution from information technology: Despite accounting for only 5 percent of aggregate output, information technology producers accounted for about 35 percent of the increase in total factor productivity. …

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