U.S. Total Factor Productivity Slowdown: Evidence from the U.S. States

Roberto Cardarelli and Lusine Lusinyan

No 2015/116, IMF Working Papers from International Monetary Fund

Abstract: Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.”

Keywords: WP; TFP growth; Productivity; growth; stochastic frontier analysis; U.S. states; total factor productivity growth; TFP determinant; TFP trend; TFP deceleration; TFP experience; Total factor productivity; Human capital; Technological innovation (search for similar items in EconPapers)
Pages: 24
Date: 2015-05-28
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Citations: View citations in EconPapers (29)

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