But for the more recent period, studies tend to find that the MFP acceleration is more broad-based across industries that use technology—not confined to the IT-producing sector e.
Sectors that produce IT, especially semiconductors, have actually contributed somewhat less to MFP growth in the s relative to the late s. A mechanism that may explain the continued rise in MFP in sectors that use IT is that firms are learning new and better ways to use the technology they already have in place to become more productive.
Indeed, some evidence suggests that the extraordinarily high rates of investment in high-tech equipment during the second half of the s actually reduced measured productivity growth over that period Basu et al. The reason is that firms had to divert resources from current production and use them instead for installing the new capital and learning how to use it.
If firms continue to increase their proficiency in using the technology they already have, this could help keep productivity growing at a robust pace. Moreover, a fundamental way that IT enhances productivity is by allowing firms to reorganize workplace operations, a process that takes time. According to Sam Walton, he benefited in the s and s from knowledge he gained in the s and s, when he flew around the country visiting competing discount stores and attending IBM conferences Walton and Huey Formal studies e.
For example, Brynjolfsson and Hitt look at a sample of large U. They find that the benefits of computers for output and productivity rise over time and can take at least five to seven years to be fully realized. Basu et al. More generally, innovations in IT appear to have led to co-invention and co-investment in other sectors, such as retail trade. Other studies in this literature find additional reasons for a lag between the acquisition of new technology and the payoff in terms of output and productivity.
For example, the benefits of IT used by one firm, such as successful new managerial ideas, are often adapted and adopted by other firms, a process that takes time for a discussion, see, for example, Bresnahan, undated. For the latter firms, it may be easier and cheaper to innovate by watching what other firms are doing, rather than inventing some new organizational change themselves, because they learn by analyzing the experimentation, the successes and, importantly, the mistakes of others.
These analyses make me fairly optimistic about productivity growth going forward. It seems unlikely that the business learning and reorganization that we hear about and that the academic literature emphasizes has suddenly disappeared. My sense is that businesses are still learning what new technologies can do for them. The FOMC has stated for some time that, with underlying inflation remaining low, policy accommodation can be removed at a pace that is likely to be measured.
In fact, the Committee raised the rate by 25 basis points at each of the last six meetings. To receive full access, Subscribe Today.
You can also subscribe to our daily newsletter. Skip to main content. Forgot your password? Remember me. Log in. Subscribe Subscribe Now. Register Register with JOC. More on JOC. LA-LB to keep anchored container ships farther off coast. Port News. BNSF Railway. Port of Los Angeles. Maritime News. Container supply restraints for Indian exports easing. Container Lines. Parcel vs. The unit labor costs that are provided take into account more detail than is provided in the earlier labor reports, including the effects of employee benefit plans, stock options expensing and taxes.
Changes in percentage, presented in annualized rates, are the key figures released with this report. Separate productivity rates are released for the business sector, non-farm business sector and manufacturing.
Manufacturing is kept separate because, unlike the rest of the data, total volume output is used instead of GDP figures. Moreover, manufacturing also shows the highest volatility of any of the industry groups. Productivity figures are provided across the economy as a whole, as well as for major industry groups and sub-sectors—it is a very thorough and detailed release, which is the main reason for the long time lag between period end and data release. Strong productivity gains have been one of the main reasons that the U.
Productivity gains have historically led to gains in real income, lower inflation and increased corporate profitability. A company that is increasing output with the same number of hours worked will likely be more profitable, which means that it can raise wages without passing that cost on to customers. This, in turn, keeps inflation pressures down while adding to GDP growth. Bureau of Labor Statistics. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. In bivariate tests of inflation and productivity and in multivariate tests using controls for cyclical effects, there is no evidence of a consistent relationship between inflation and productivity growth with regard to either sign or magnitude.
Therefore, the present analysis does not support the view that further reductions in inflation from already low single-digit levels would have a positive impact on labor productivity growth for major industrial countries.
This is a preview of subscription content, access via your institution. Rent this article via DeepDyve. Box, George; Jenkins, Gwilym. Time Series Analysis , revised ed. Google Scholar. Briault, Clive. Bruno, Michael. Clark, Peter. Englander, A. Stephen; Gurney, Andrew. Feldstein, Martin. Fischer, Stanley. Freeman, Donald; Yerger, David.
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