What the study found
The study finds that about two-thirds of the U.S. productivity slowdown in the 1970s and 2000s can be explained by a lack of improvement in allocative efficiency, meaning how well resources are distributed across sectors. It also finds that higher sector-level volatility is associated with worse allocative efficiency.
Why the authors say this matters
The authors conclude that allocative efficiency appears to be an important part of understanding the productivity slowdown. The study suggests that changes in how sectors vary over time may be related to deterioration in allocative efficiency.
What the researchers tested
The researchers extended the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and to decompose aggregate productivity growth in a multisector economy. They used this approach to evaluate the contribution of cross-sector allocative efficiency to the U.S. productivity slowdown.
What worked and what didn't
Their decomposition indicates that the lack of improvement in allocative efficiency accounted for approximately two-thirds of the slowdown. The data also show an association between increased sector-level volatility and deteriorating allocative efficiency.
What to keep in mind
The abstract does not describe detailed limitations or caveats. The findings are based on a multisector framework and on the U.S. productivity slowdown in the 1970s and 2000s.
Key points
- About two-thirds of the U.S. productivity slowdown is attributed to lack of improvement in allocative efficiency.
- Allocative efficiency here refers to how well resources are distributed across sectors.
- The study uses an extension of the Oberfield (2013) framework.
- Higher sector-level volatility is associated with worse allocative efficiency.
- The analysis focuses on the U.S. in the 1970s and 2000s.
Disclosure
- Research title:
- Lack of allocative efficiency improvement explains much of U.S. productivity slowdown
- Authors:
- Lin Shao, Rongsheng Tang
- Institutions:
- Economic Research Institute, University of North Carolina at Greensboro
- Publication date:
- 2026-02-01
- DOI:
- 10.1111/caje.70046
- OpenAlex record:
- View
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