The Productivity Paradox in US Manufacturing: A Firm- and Industry-Level Perspective

Danial Lashkari and Jeremy Pearce

AEA Papers and Proceedings, 2026, vol. 116, 462-468

Abstract: US manufacturing productivity growth grew rapidly in the 1987–2007 period but has been nearly zero since 2010. We decompose this productivity slowdown across industries and firms and find it to be pervasive. More specifically, it appears in the initially fastest growing industries (including Computer and Electronic Products) just as in initially lagging ones, and it affects both leading and following firms within industries. This broad-based decline occurred even as R&D intensity rose, suggesting declining research effectiveness rather than reduced innovation effort. Our firm-level analysis reveals this productivity paradox operates broadly rather than being concentrated among specific firm types or industries.

JEL-codes: D24 J24 L60 O31 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/pandp.20261044

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