Productivity trends in the United States

Abstract

Purpose

The purpose of this paper is to investigate productivity growth and technical progress bias in the USA.

Design/methodology/approach

Following the work of Kohli in 1978 and Diewert and Wales in 1992, the paper estimates output supply and input demand functions in the context of a normalized quadratic (NQ) variable profit function using US data (over a period from 1960 to 2002) on six goods: output, exports, imports, labour, reproducible capital, and fixed capital.

Findings

Results show that the NQ variable profit function with linear splines works very well and the technique for determining structural breaks is effective. Estimates show that the US productivity rate in the last decade recovered in a stepwise manner, rather than jumped overnight in 1996 (as some previous studies have suggested), and that the US productivity revival after 1995 has been volatile and fragile.

Originality/value

This paper highlights productivity trends in the USA.

Citation

Serletis, A. and Feng, G. (2006), "Productivity trends in the United States", Journal of Economic Studies, Vol. 33 No. 5, pp. 320-335. https://doi.org/10.1108/01443580610706555