Five Decades of Decline: U.S. Construction Sector Productivity

Chen Yeh
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Chen Yeh: https://www.richmondfed.org/research/people/yeh

Richmond Fed Economic Brief, 2025, vol. 25, issue 31

Abstract: Construction labor productivity fell by more than 30 percent from 1970 to 2020, while overall U.S. economic productivity doubled over the same period. Despite potential biases in price deflators, multiple studies confirm that the productivity decline is real, with physical measures like housing units per worker showing similar stagnation. Increasing land-use regulations may be a plausible cause for the decline, as more strict land-use regulations disincentivize construction companies from pursuing larger projects, keeping them relatively small. In addition, this reduces incentives for technological innovation and economies of scale.

Keywords: Economic Growth; Production and Investment (search for similar items in EconPapers)
Date: 2025
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