DP19031 Technology and US Manufacturing Employment: Lessons from the estimation of a microeconomic multiproductivity production function
From 2000 to 2010 manufacturing firms suppressed more than 5 million jobs.
A slow recovery has brought back one third today. Economists have tried to disentangle causes: demand, competition (foreign, domestic), and technology. We contribute by estimating a multiproductivity production function, using firm-level and industry data, to assess the structural role of technology. We obtain four main findings. First, starting in 1980 it was a wave of labor-augmenting productivity that stopped after 2010. Second, technology didn’t destroy jobs, rather created them in net terms through its compensation effcts. Third, this conclusion holds even when accounting for the powerful cross-effects of competition (gains of one firm may be losses of another). Lastly, the loss of jobs between 2000-2010 happened because firms’ demand decreased.
