Ten Questions on Productivity, the Holy Grail of Economics
It defines the very essence of economic progress and development and yet is notoriously hard to measure.
Productivity, the amount of goods or services firms and workers can produce per hour of labor, is as central a concept to modern economic thinking as it is elusive to grasp and explain.
Despite the advent of new technologies and businesses like Google, Apple, Uber, and others, the official figures point to a fairly chronic slowdown in productivity growth in the wake of the Great Recession of 2007−09, both in the United States and other rich nations.
So ahead of a conference at the Peterson Institute for International Economics on the subject, here are a few questions on the subject that can hopefully make for a productive discussion:
- Is productivity being underestimated given the day-to-day benefits of recent technological innovations that might not add directly to measured output?
- Is productivity being overestimated because of low-balled reported rates of hours worked that do not accurately reflect reality (i.e. how many Americans actually work a 35-hour week?)
- How accurately can economists measure productivity in services, where output can be more subjective and hard to define, versus in manufacturing, where production of physical goods lends itself to more precise accounting?
- How does assigning a value to leisure time factor into assessing overall levels of productivity?
- How does hedonic pricing, which tries to account for technological improvements in the value of goods, affect calculations about productivity growth? How does it affect cross-country comparisons?
- If productivity has in fact slowed substantially, what is the cause for the slowdown?
- Are there policies that can help address slower productivity gains, or is this a broad structural trend without clear remedy?
- How should policymakers reconcile the long-term benefits of productivity with the short-term losses, from say workers who are suddenly out of a job due to new technology?
- Economists often say structural reforms are key to boosting productivity. What are some concrete examples of such reforms, and what are their potential downsides?
- How do economists measure their own productivity? Who are some of the most productive economists in the world?
Without promising an answer to each of these questions, look for another post after Monday's event summarizing the debate.