Labor Productivity: Developments Since 1995

Abstract

[Excerpt] The paper also explores the reasons for the productivity acceleration and concludes that it likely stemmed from developments in the information technology (IT) sector, including faster technological change in the production of IT goods and the boom in business investment in those goods. Although widely accepted, that explanation raises two questions: Why did productivity growth accelerate further during a period—the years since the 2001 business-cycle peak—when IT investment fell substantially? And why did European economies fail to experience a similar productivity surge even though they had access to the same IT goods that were available in the United States? The paper outlines several possible answers to those questions but concludes that further research will be necessary before economists can provide a consensus answer.