A Social Model for U.S. Productivity Growth

Bowles, Samuel; Gordon, David M.; Weisskopf, Thomas E.
March 1984
Challenge (05775132);Mar/Apr84, Vol. 27 Issue 1, p41
The article discusses the reasons behind the slowdown in productivity growth in the United States since the mid 1960s. Slower growth in productivity has resulted in slower growth of hourly income. This explains why people have worked more and earned less since the mid-1960s. The more satisfaction a worker draws from his or her job, the stronger the motivation to work intensively. Both the intensity of supervision and of divisions among workers increased significantly from 1948 to 1966, while the cost of losing one's job declined only slightly. After 1966, by contrast, the rise in the intensity of supervision slowed substantially while divisions among workers and the cost of job loss both declined significantly. Competitive pressures push businesses to pursue cost-reducing innovations in technique and the organization of production. Waves of innovation, tends to knock out firms that cannot stand the competitive pressure. The greater the rate of business failure, the greater is the rate at which relatively high-cost firms are displaced by relatively low-cost ones. This explains higher rate of business failure and elimination of backward firms during this period. Declining work intensity accounts for 28 per-cent of the drop in productivity growth.


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