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Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown

Ryan Decker, John Haltiwanger, Ron Jarmin () and Javier Miranda

No 2017-019, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: A large literature documents declining measures of business dynamism including high-growth young firm activity and job reallocation. A distinct literature describes a slowdown in the pace of aggregate labor productivity growth. We relate these patterns by studying changes in productivity growth from the late 1990s to the mid 2000s using firm-level data. We find that diminished allocative efficiency gains can account for the productivity slowdown in a manner that interacts with the within-firm productivity growth distribution. The evidence suggests that the decline in dynamism is reason for concern and sheds light on debates about the causes of slowing productivity growth.

Keywords: Job reallocation; Labor supply and demand; Productivity (search for similar items in EconPapers)
JEL-codes: O47 L11 E24 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff and nep-mac
Date: 2017-02-07
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Journal Article: Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown (2017) Downloads
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