This piece makes you think! That labor productivity growth difference is indeed spectacular. But why does half of the US population believe that they got completely screwed in the labor market over the last 30 years? One (nagging) thought in my head is that US employment and US payroll figures have diverged over the time period considered (payroll figures were always much higher than employment figures; just look at recent months). Thus, what could be happening is that effective labor input in the US is much higher than indicated by the (household survey) employment data. But I have no idea whether this effect could be large or small given how the EU does its labor statistics.
Now your comment is making me think! Worth looking into more closely, but here is my first reaction, shooting from the hip: for productivity levels, it would be easier to see how under-estimating employment could make a big difference. For growth rates, however, it seems less likely. The rate of growth of productivity is approximately equal to the rate of growth of output minus that of labor input. The latter, if we assume constant hours worked for simplicity, equals the rate of growth of employment. So to overestimate productivity growth by 1% we need to be underestimating employment growth by 1%--every year. Over a 20-30 period this would result in an implausible divergence from actual employment. So while employment mis-measurement could definitely account for one-off strange productivity swings, it seems less likely to explain much of the productivity divergence over a long stretch, don't you think?. But as I said, worth looking closer into the numbers.
This piece makes you think! That labor productivity growth difference is indeed spectacular. But why does half of the US population believe that they got completely screwed in the labor market over the last 30 years? One (nagging) thought in my head is that US employment and US payroll figures have diverged over the time period considered (payroll figures were always much higher than employment figures; just look at recent months). Thus, what could be happening is that effective labor input in the US is much higher than indicated by the (household survey) employment data. But I have no idea whether this effect could be large or small given how the EU does its labor statistics.
Now your comment is making me think! Worth looking into more closely, but here is my first reaction, shooting from the hip: for productivity levels, it would be easier to see how under-estimating employment could make a big difference. For growth rates, however, it seems less likely. The rate of growth of productivity is approximately equal to the rate of growth of output minus that of labor input. The latter, if we assume constant hours worked for simplicity, equals the rate of growth of employment. So to overestimate productivity growth by 1% we need to be underestimating employment growth by 1%--every year. Over a 20-30 period this would result in an implausible divergence from actual employment. So while employment mis-measurement could definitely account for one-off strange productivity swings, it seems less likely to explain much of the productivity divergence over a long stretch, don't you think?. But as I said, worth looking closer into the numbers.