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Computerizing Industries and Routinizing Jobs: Explaining Trends in Aggregate Productivity

Sangmin Aum, Sang Yoon (Tim) Lee and Yongseok Shin

No 24357, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Aggregate productivity growth in the U.S. has slowed down since the 2000s. We quantify the importance of differential productivity growth across occupations and across industries, and the rise of computers since the 1980s, for the productivity slowdown. Complementarity across occupations and industries in production shrinks the relative size of those with high productivity growth, reducing their contributions toward aggregate productivity growth, resulting in its slowdown. We find that such a force, especially the shrinkage of occupations with above-average productivity growth through “routinization,” was present since the 1980s. Through the end of the 1990s, this force was countervailed by the extraordinarily high productivity growth in the computer industry, of which output became an increasingly more important input in all industries (“computerization”). It was only when the computer industry's productivity growth slowed down in the 2000s that the negative effect of routinization on aggregate productivity became apparent. We also show that the decline in the labor income share can be attributed to computerization, which substitutes labor across all industries.

JEL-codes: E01 E22 E25 O41 O47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-lma, nep-mac and nep-tid
Date: 2018-02
Note: EFG PR
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Published as Sangmin Aum & Sang Yoon Tim Lee & Yongseok Shin, 2018. "Computerizing Industries and Routinizing Jobs: Explaining Trends in Aggregate Productivity," Journal of Monetary Economics, .

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