Industry contributions to productivity growth in U.S. manufacturing: an application of alternative output concepts-Reference-Cited by-同舟云学术

Industry contributions to productivity growth in U.S. manufacturing: an application of alternative output concepts

Published:2023-09-29 Issue: Volume: Page:
ISSN:1937-4658
Container-title:Monthly Labor Review
language:
Short-container-title:MLR

Author:

Eldridge Lucy P.,Powers Susan G.

Abstract

To understand the performance of the U.S. manufacturing sector, in this article, we explore the performance of individual industries. We first use the U.S. Bureau of Labor Statistics published data to look at the influence of industries on sector-level performance and total factor productivity (TFP) growth. The underlying dynamics of production in any given industry determine its influence on the sector as a whole. Both an industry’s share of output and its individual TFP growth vary over time, and these changes jointly determine the industry’s contribution to performance in the manufacturing sector. Next, we trace the contribution of industries to manufacturing sector TFP by using three alternative output concepts—value-added output, sectoral output, and gross output. We examine the differences in industry contributions that result from the use of the alternative output measures, over 2000–21 and three different business cycles (2000–07, 2007–19, and 2019–21). We show that one must carefully deliberate before selecting a value-added-output, sectoral-output, or gross-output framework for TFP and contribution analysis.

Publisher

Bureau of Labor Statistics

Subject

General Medicine

Reference22 articles.

1. 1 Total Factor Productivity for Major Industries-2021, USDL-22-2181 (U.S. Bureau of Labor Statistics, November 18, 2022, updated annually), https://www.bls.gov/news.release/prod5.nr0.htm.

2. 2 The most recent business cycle period we consider, 2019-21, is not complete but began in 2019 with the recession that resulted from the onset of the COVID-19 pandemic.

3. 3 See Lucy P. Eldridge and Susan G. Powers, "The importance of output choice: implications for productivity measurement," Monthly Labor Review, September 2023, https://doi.org/10.21916/mlr.2023.22.

4. 4 Total factor productivity (TFP) is measured with the use of discrete estimates of growth rates-that is, growth rates derived from yearly data on output and inputs. As a result, measured TFP growth is a discrete approximation to true growth. For further description of this issue, see Robert M. Solow, "Technical change and the aggregate production function," The Review of Economics and Statistics, vol. 39, no. 3, August 1957, pp. 312-320. The U.S. Bureau of Labor Statistics (BLS) estimates the annual rate of growth of TFP as the percent change from the prior year.

5. 5 Solow, "Technical change and the aggregate production function." Note that Solow's growth model assumes Hicks-neutral technical change and constant returns to scale.