 The Productivity Slowdown in Advanced Economies: Common Shocks or Common Trends?John Fernald, Robert Inklaar and Dimitrije Ruzic Review of Income and Wealth, 2025, vol. 71, issue 1 Abstract: This paper reviews advanced‐economy productivity developments in recent decades. We focus primarily on the facts about, and explanations for, the mid‐2000s labor‐productivity slowdown in large European countries and the United States. Slower total factor productivity (TFP) growth was the proximate cause of the slowdown. This conclusion is robust to measurement challenges including the role of intangible assets, rankings of productivity levels, and data revisions. We contrast two main narratives for the stagnating TFP frontier: The shock of the Global Financial Crisis; and a common slowdown in TFP trends. Distinguishing these two empirically is hard, but the pre‐recession timing of the U.S. slowdown suggests an important role for the common‐trend explanation. We also discuss the unusual pattern of labor productivity growth since the start of the Covid‐19 pandemic. Although it is early, there is little evidence so far that the large pandemic shock has changed the slow pre‐pandemic trajectory of labor‐productivity growth. Date: 2025 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:revinw:v:71:y:2025:i:1:n:e12690 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Income and Wealth is currently edited by Conchita D'Ambrosio and Robert J. Hill More articles in Review of Income and Wealth from International Association for Research in Income and Wealth Contact information at EDIRC. |
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