Race to the Bottom: Low Productivity, Market Power, and Lagging Wages

Lance Taylor and Özlem Ömer

International Journal of Political Economy, 2019, vol. 48, issue 1, 1-20

Abstract: “Dualism” in the structure of production across sectors of the U.S. economy, employment by sector, productivity levels and growth, real wages, and intersectoral terms of trade increased markedly between1990 and 2016. The discussion focuses on 16 sectors. Seven were “stagnant”—construction, education and health, other services, entertainment, accommodation and food, business services, and transportation and warehousing. They had low productivity levels, productivity growth rates hovering around zero, and low real wages. Their share of total employment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higher and positively growing productivity while the terms of trade shifted against them. This bifurcation between industries is discussed in terms of a simple model. Increasing duality and secular stagnation are distinct possibilities.

Date: 2019
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DOI: 10.1080/08911916.2018.1550951

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