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June 2002, Vol. 125, No. 6
Comparing 50 years of labor productivity in U.S. and foreign manufacturingAaron E. Cobet and Gregory A. Wilson
Labor productivity in manufacturing has been a topic of interest throughout recent decades. Research was directed at different issues at different times, depending on economic developments. For example, after 1973, discussion focused on whether there was a historical slow-down in productivity growth in the industrialized countries.1 Currently, an issue has focused on whether and how the introduction of information technology is affecting manufacturing productivity.2 In addition, the progressive globalization of the world economy, increasing exposure of individual countries to international trade and capital movements, has heightened interest in productivity, particularly in comparisons among countries. For instance, analysts are examining the relations among labor costs, productivity, prices, and competition.3
The Bureau of Labor Statistics international comparisons program began estimating and comparing trends in manufacturing labor productivity and unit labor costs in 1973, making comparisons back to 1950. These accumulated data make it possible to now look at these trends from the perspective of half a century.
Labor productivity in the U.S. manufacturing sector grew continuously over the last half of the 20th century, and this growth accelerated during the 1990s. This is different from most of the other countries in this article, for which productivity increases slowed over time. The growth in U.S. labor productivity was accompanied by relative stability in manufacturing employment and hours worked, in contrast to most other countries, where manufacturing employment and hours declined. Historically, increases in manufacturing hourly compensation and in unit labor costs have been more moderate in the United States than elsewhere, although, during the 1990s, other countries have succeeded in reducing their hourly compensation and unit labor cost increases to the U.S. rates or below.
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1 Karin Wagner and Bart Van Ark, eds., International Productivity Differences; Measurement and Explanations (Amsterdam, The Netherlands, Elsevier Science B.V., 1996).
2 Paul Schreyer, "The Contribution of Information and Communication Technology to Output Growth: a Study of the G7 Countries," OECD, STI Working Paper 2000/2 (March 2000).
3 Edwin R. Dean and Mark K. Sherwood, "Manufacturing costs, productivity, and competitiveness, 1979–93," Monthly Labor Review, October 1994, pp. 3–16.
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