Economics Stack Exchange Archive

What have been the main drivers of increased productivity since 1950?

• posted by: David on 2011-10-31
• tagged: organizational-economics, productivity
• score: 4

I am very interested in the underlying forces that drive economic development. Therefore, I am interested to know whether it is possible to identify the main drivers of increased (worker) productivity. In case this is possible to identify, then I am interested in what these factors are. My area of interest is Europe in the period after 1950, but I am also interested in other areas and time periods. I expect the answer to include some of the following factors:

• Political developments
• Improved transportation infrastructure
• Innovations in technology
• Organizational developments
• Social developments
• Educational developments
• Better health care

I know that it might be hard to make a clear distinction between the categories and that there will be a lot of overlapping, so if you have other categories, then I am interested as well.

Answer 395

• posted by: Jason B on 2011-10-31
• score: 2

Based on the list of factors you’ve provided, I suspect you really want to know what the drivers of multi-factor productivity change have been (or perhaps you’d like to know how labor quality is measured, and how labor quality has changed). I’ll try to justify this conclusion as I think it is an important point that is often lost in these discussions…

If we are talking about partial labor productivity (PFP) then it is usual to find that labor productivity increases with capital intensity. Indeed, one of the most important drivers of European labor productivity growth has been changes in the labor participation rate; for example European labor participation fell between 1973 and ‘95 (apparently as a result of tax policy), causing capital substitution and, hence, relatively rapid increases in labor productivity (GDP per hour worked). The opposite happened after 1995–labor productivity growth slowed (even though labor quality was increasing) due to labor market reforms aimed at increasing labor participation rates. See van Ark et al. (2008, JEP 22(1)) for a good discussion along these lines.

Another way to consider the same issue is to look at multi-factor productivity. EU MFP growth decreased from about 1% in ‘70-95 to about 0.5% in ‘95-06. As a result, labor productivity growth fell even though average worker skill levels were increasing (see O’Mahony et al. in Innovation and Economic Development (Cimoli et al eds)).

Answer 394

• posted by: Hauser on 2011-10-31
• score: 1

off the top of my head and directly and indirectly related to increased productivity since the 50s:

Technology:

• age of Nanotechnology ( esp. scanning probe microscopy in the 80s - this has triggered a alot of tech. and scientific progress, increased productivity on nano-scale research a lot)
• Spintronics (GMR-effect triggerd huge steps in data storage density, every redundant bit of knowledge can be saved)
• Personal Computer and Moore’s Law
• Internet (networking and fast information exchange of scientists)

Organization:

• managment philosophies (japanese Kaizen)
• logistics heavily increased by software (SAP)
• increased information managment in companies (Wikis etc.)

Societal:

• emancipation (more brain power in science, increased overall productivity)
• higher diversified and specialised study courses (more experts for special problems)
• more division of labour (again emancipation, higher specialization, globalization)
• higher life expectancy (cost-benefit ration of training an expert
• one laptop per child

Good links on this topic:

http://en.wikipedia.org/wiki/History_of_technology
http://www.indiana.edu/~idt/shortpapers/documents/ITduring20.html

to be continued… :)

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