Posted by: Michael Mandel on February 29
We’ve seen a collapse of manufacturing jobs since 2000. Is this because of productivity growth or because the jobs have been moved out of the country?
Here’s a piece of evidence that suggests that productivity growth is not the cause. In 1997 the BLS, as part of its employment projections, did a forecast of export and import growth over the next ten years (actually 1996-2006). They predicted 104% growth in real exports over that period (roughly doubling) and 86% growth in real imports.
In fact, as the chart shows, actual export growth (the red bar on the left) was half of what was projected, while import growth was slightly faster than what was projected.
If job loss had been primarily driven by productivity growth, the odds are that exports would not have fallen so far short of what was expected. In fact, all other things being equal, faster-than-expected productivity growth should have increased exports relative to predictions, rather than decreased it. That’s because productivity growth would have decreased costs, and made U.S. exports more competitive.
(Note: This is not just a fluke of the BLS numbers. DRI/McGraw-Hill had a similar ten-year forecast for export and import growth around this time).
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