the drivers of productivity: the role of organisational change and other firm-level factors,...

Session 5: "The drivers of productivity: The role of

organisational change and other firm-level factors”

Catherine L. Mann Brandeis University, OECD Chief Economist (designate)

1

Weave a narrative

• Rising IT intensity and productivity overall

– But overall slowdown from 1990s to post-crisis

• IT-intensity and employment dynamics

– Tighter matching of employment to demand

Implications for employment and wages

2

IT Intensity, Productivity, Employment

On the Productivity Slowdown

• 90s to 20s to pre/post-crisis:

–Increase in productivity overall

–Leading sectors: lead less

–Lagging sectors: many lag more

–Middle sectors: broader group

3

IT Intensity and Productivity

On cyclical labor market dynamics

• Over the 20s boom and bust:

–Greater pro-cyclicality of IT intensive firms

–Particularly mfg, but also services

–Small IT-intensive services

• greatest job growth

4

IT Intensity and Employment

• Real IT-intensity

–Hardware, software, IT services

–KLEMS, BEA

–BLS prices

• Employment and firm size

–Statistics of US Business Dynamics

• GDP/FTE

– BEA 5

Data Construction

6

IT-intensity Contribution to Labor

Productivity: 1990s

Mann, Accelerating the Globalization of America: The Role for Information Technology, 2006

-0.70%

-0.50%

-0.30%

-0.10%

0.10%

0.30%

0.50%

0.70%

(3.00) (2.00) (1.00) - 1.00 2.00 3.00

Av

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(2

001-2

007)

IT Intensity of Industry (Log of IT/FTE Rank 2001-2007)(2)(3)

Top-half industries by IT Intensity, ITEQ/FTE> .20

Bottom-half industries by IT Intensity, ITEQ/FTE<.20

(Size of bubble indicates the industries average share of GDP)

Professional, Scientific, and Technical Services

Durable Goods

Non-Durable Goods

Educational Services

Agriculture, Forestry, Fishing, Hunting

Information

Retail Trade

Insurance carriers and related activities

Utilities

Construction

Mining

Wholesale

Accomodations and Food Services

Other Services

Securities, Commodity Contracts, Investments

Rental and Leasing services

Source: Bureau of Economic Analysis

Sources: Data--Bureau of Economic Analysis, Methodology--Digital Economy 2002/2003, Visualization--

Mann, 2006; Stephanie Postles, Economic and Strategic Research, FannieMae, Sept 2014.

(1)

per FTE per FTE

IT-intensity Contribution to Labor

Productivity: 2000s to boom

-0.70%

-0.50%

-0.30%

-0.10%

0.10%

0.30%

0.50%

0.70%

(3.00) (2.00) (1.00) - 1.00 2.00 3.00

Av

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(2008

-2012)

IT Intensity of Industry (Log of IT/FTE Rank 2008-2012)(2)(3)

Top-half industries by IT Intensity, ITEQ/FTE> .17Bottom-half industries by IT Intensity, ITEQ/FTE<.17

(Size of bubble indicates the industries average share of GDP)

Professional, Scientific, and

Technical Services Durable

Goods

Non-Durable Goods

Educational Services

Agriculture, Forestry, Fishing, Hunting

Information

Retail Trade

Insurance carriers and related activities

Construction Mining

Wholesale

Accomodations and Food Services

Other Services

Securities, Commodity Contracts, Investments Administrative

and Waste Mgmt

Sources: Data--Bureau of Economic Analysis, Methodology--Digital Economy 2002/2003,

Visualization--Mann, 2006; Stephanie Postles, Economic and Strategic Research, FannieMae, Sept

2014.

Source: Bureau of Economic Analysis

(1)

per FTE per FTE

IT-intensity Contribution to Labor

Productivity: 2000s bust

Real IT-Intensity 2002 vs. 2010 all using sectors all firm sizes

9

10

Real IT-Intensity 2002 vs 2010 below average-using sectors

11

Real IT-Intensity Over Time: above average using sectors

IT-Intensity and Employment Dynamics IT-intensive net growth more volatile esp. mfg

12

IT-Intensity and Employment Dynamics small (1-99) IT intensive services greatest net growth

13

IT-Intensity and Employment Dynamics greatest growth in small IT producers

14

On the slowdown in productivity • Productivity Convergence

– but not in a ‘good’ way

– leaders stop leading

– but some laggards catch-up

• Why sectoral experience differ?

– Size, management, complementarity

1

5

IT Intensity and Productivity

Implications

On cyclical labor market dynamics

Implications:

• Tighter employment management to

business cycle demand

• Bifurcate labor market into high/low

employment volatility => wages?

1

6

IT Intensity and Employment

Implications