Measurement & analysis of productivity growth : a synthesis of thought.

Abstract: Productivity is one of the most important factors influencing our economic well-being. Productivity growth is essential to a higher standard of living and is vital to a sound economic and political environment. However, there has been a slowdown in the growth of productivity in the United States since the mid-1960s. This slowdown has caused concern among policy makers and researchers. Accordingly, several questions persist both in policy and academic circles. Why has productivity been slowing? and What can be done to reverse this trend? The purpose of this report is to address broadly the first of these two questions by surveying and synthesizing the vast literature on the measurement and determinants of productivity. This review is intended to be a source document for those interested in the measurement and analysis of productivity growth. The report is divided into five sections. In the first section, the importance of productivity growth on economic activity is discussed. In the second section, the so called facts about patterns of measured productivity growth in the United States are presented. In the third section, the methods currently used for calculating productivity indices are summarized. In the fourth section, the literature related to the determinants of the productivity growth are reviewed. Finally, in the last section, some suggestions are made for future work in this area.