Stuck in the Slow Lane: Traffic Composition and the Measurement of Trucking Productivity

Several recent studies have found large productivity gains in the trucking industry over the period covered by this study, with implications for the economic effects of public investment or the adoption of technological innovation. But a careful analysis in which traffic composition effects are removed shows that trucking productivity instead follows the predictions of the Baumol hypothesis: that productivity growth in labor-intensive services industries will tend to lag that of the economy. Physical productivity growth in the trucking industry in fact has been only a little more than 1% per year, and is attributable primarily to factors such as increases in the dimension of trucks and increased speed limits on American roads. There have undoubtedly been quality improvements in the outputs of the trucking sector that can be attributed to technological change in the industry, as in other industries in the service sector; but such improvements are fully consistent with the expectation that physical productivity improvements in the service sector have been modest.