The Productivity Paradox Part Two

Open Access
Author:
Clark, Brett Robert
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • J. Randall Woolridge, Thesis Supervisor
  • Brian Spangler Davis, Honors Advisor
Keywords:
  • Solow
  • Productivity Paradox
  • Labor Productivity
Abstract:
Since the 1950s, worker productivity growth in the United States has averaged 2.3%, however, over the past 10 years productivity growth has slowed to an average of 1.2%. This paper examines the extent that technology investment has played a role in increasing worker productivity. This question is answered through the meta-analysis of several contrasting works on the topic and a comparison between the current period and other resolved cycles of abnormal productivity growth. Leading theories for the current period generally mirror those from the past, including issues in the mis-measurement of outputs, misconceptions regarding the scale of investment and implementation, or extended payoff lags for recent developments. This paper is designed to re-examine the current period with the leading theories from the past in order to develop a holistic view of this period of depressed productivity growth with a realized cycle of stagnation and expansion. The result of this research is the conclusion that the current period of low productivity growth as related to IT is due to a combination of ambiguous and unmeasured-outputs, delayed investment payoffs, and an increased importance in the diffusion of human capital.