Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown

14 Pages Posted: 22 Feb 2017

See all articles by Ryan Decker

Ryan Decker

Board of Governors of the Federal Reserve System

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Ron S. Jarmin

U.S. Census Bureau

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications

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Date Written: February 01, 2017

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.

Suggested Citation

Decker, Ryan and Haltiwanger, John C. and Jarmin, Ron S. and Miranda, Javier, Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown (February 01, 2017). US Census Bureau Center for Economic Studies Paper No. CES-WP-17-17. Available at SSRN: https://ssrn.com/abstract=2921979 or http://dx.doi.org/10.2139/ssrn.2921979

Ryan Decker (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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John C. Haltiwanger

University of Maryland - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Institute for the Study of Labor (IZA) ( email )

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Ron S. Jarmin

U.S. Census Bureau ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

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