Recent US Manufacturing Employment: The Exception that Proves the Rule

14 Pages Posted: 6 Nov 2017 Last revised: 25 Jan 2018

See all articles by Robert Z. Lawrence

Robert Z. Lawrence

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Date Written: January 2018

Abstract

This Working Paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities. While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.

Keywords: Deindustrialization, Productivity Measurement

JEL Classification: D24, J21, O14, F16

Suggested Citation

Lawrence, Robert Z., Recent US Manufacturing Employment: The Exception that Proves the Rule (January 2018). Peterson Institute for International Economics Working Paper No. 17-12 ; HKS Working Paper No. RWP18-002. Available at SSRN: https://ssrn.com/abstract=3064887 or http://dx.doi.org/10.2139/ssrn.3064887

Robert Z. Lawrence (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1118 (Phone)
617 496 2850 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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