The Breaks in per Capita Productivity Trends in a Number of Industrial Countries

Abstract

The purpose of this article is to study the trends in per capita productivity in several major industrialised countries. The analysis is first based on annual data over a long period spanning the entire 20th century for the United States, France and the United Kingdom. Productivity trends are then studied over a shorter period, using quarterly data, for the United States, France, the United Kingdom, Germany, Spain, Japan and the Netherlands. There are already a large number of studies of this kind, but they are too often focused on presenting average productivity growth rates for given periods chosen on an ad hoc basis. In this article, we use a robust statistical method to endogenously identify possible breaks in per capita productivity trends. This method, developed by Bai and Perron (1998), brings out the following salient features: – in the United States, per capita productivity growth accelerated following the trend break at the start of the 1920s, then slowed down at the end of the 1960s. This finding is in line with the “Big Wave” concept developed by Gordon (1999, 2002) to describe the trends in US productivity growth throughout the 20 th century. – French and UK productivity started catching up with that in the United States around the end of the Second World War. – Most of the countries under review recorded slower trend productivity growth in the first half of the 1970s. In the United States, this break occurred in 1966. This finding differs from that of other existing analyses, which point to 1974. – Trend productivity growth in Europe and Japan slowed in the 1990s, whereas US productivity gained momentum over the same period.Productivity trends ; Structural breaks ; Bai and Perron method