Désirée Christofzik, Steffen Elstner, Lars Feld, Christoph Schmidt, 22 November 2021

Despite massive digitisation efforts, the German economy has experienced a marked slowdown in productivity growth. This column shows that an important share of this trend reflects the combination of strong labour market performance with the structural shift towards services in the German economy. A large part of the productivity paradox can be resolved by the observation that the notable technological progress in the ICT-producing sector tends to stimulate aggregate employment growth in step with production growth, thereby consuming its effect on aggregate productivity. The results suggest that higher productivity growth should not be the sole policy objective.

Robert J. Gordon, Hassan Sayed, 21 August 2020

The benefits of the ‘ICT revolution’ are readily seen in labour productivity statistics for the US, but a similar acceleration of productivity growth was not seen in Western Europe. This column argues that most of the 1995-2005 US productivity growth revival was driven by ICT-intensive industries producing market services and computer hardware. In contrast, the EU10 experienced a 1995-2005 growth slowdown due to a paucity of ICT investment, a failure to capture the efficiency benefits of ICT, and performance shortfalls in specific industries.  After 2005 both the US and the EU10 suffered a growth slowdown, indicating that the benefits of the ICT revolution were temporary rather than providing a new permanent era of faster productivity growth. 

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