Catherine Mann, Chief Economist at the OECD, welcomed participants to the joint OECD-NBER conference on productivity research. The conference aims to inform approaches to economic challenges by assessing the productivity slowdown and highlighting complexity in new dimensions like the environment and government. Bringing together OECD and academic researchers strengthens links, highlights data, provides a broad canvas for research, and promotes complementary empirical and theoretical analysis. Productivity growth contributes substantially to GDP per capita and growth. Raising productivity involves factor augmentation through investments in knowledge-based capital and skills, as well as reallocating labor to more productive firms. The productivity slowdown presents new challenges to understand causes like factor augmentation, reallocation, structural barriers to entry and

1. Opening Remarks
Catherine L. Mann
Chief Economist
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Welcome!
Joint OECD-NBER conference
Why new productivity research?
 Informs New Approaches to Economic Challenges (NAEC)
 Assesses productivity slowdown (ECO/STI project)
 Highlights complexity and new dimensions (ENV, GOV)
 Supports evidence-based policy advice

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Welcome!
Joint OECD-NBER conference
Why OECD-NBER?
 Strengthens links with academic researchers
 Highlights extensive OECD data
 Provides broad canvas for research
 Promotes complementary theory/empirical analysis

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The context: Productivity matters…
to the size of the pie
Contribution of production factors to GDP per capita
Relative to the United States in 2011
Source: Johansson, et al., (2012), OECD Economics Department Working Papers, No. 1000.

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The context: Productivity matters…
to the growth of the pie
Source: Johansson, et al., (2012), OECD Economics Department Working Papers, No. 1000.
Contribution to growth in GDP per capita (2000-2011)

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The Context: Raising Productivity…
via factor augmentation and reallocation
Y = A f ( K, L)
Factor Augmentation:
 K == investment vs. Knowledge Based Capital
 L == labor vs. Human Capital (skills matching)
 A == MFP (transformation)
A (transformation—micro; reallocation—macro)
Size of firm
Role for trade in value added
Potential transition costs

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The Context: Raising Productivity
Factor Augmentation—K vs. KBC
Knowledge-Based Capital and Spillover Effects
Selected OECD Countries, 1995-2007
Note: Labour productivity growth can be decomposed into the contributions of capital deepening and MFP. The chart plots
the contribution of KBC/tangible capital deepening to labour productivity growth against the growth rate in MFP. The
correlations are robust to individually dropping outliers. Unlike in conventional growth accounting exercises, the MFP
estimates are based on a value-added series that capitalises KBC. * denotes statistical significance at the 10% level.
Source: Andrews and Criscuolo (2013), OECD Economics Department Working Paper Policy No. 1046,
based on Corrado et al (2012).

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The Context: Raising Productivity
Factor Reallocation—to the Most Productive Firms
Notes: The estimates show the extent to which firms with higher than average labour productivity have larger employment
shares for a set of representative countries from a larger cross-country sample. For example, productivity in the non-farm
business sector in the US is around 50% higher due to the actual allocation of employment, compared to a baseline in
which labour is allocated randomly across firms (AE=0).
Source: Andrews, D and F. Cingano (2014), Economic Policy 29(78), pp. 253-296.
Static allocative efficiency: contribution of the allocation of employment
across firms to labour productivity; log points

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The Context: Raising Productivity
Structural Environment – Entry and Exit
Source: Andrews, D and F. Cingano (2014), Economic Policy 29(78), pp. 253-296.
Static allocative efficiency in the manufacturing sector and cost of firm entry
and exit

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New Challenge: Productivity Slowdown
Really, why, and for how long?
 Factor augmentation?
 Factor reallocation?
 Structural environment?
 Global spillovers?
New research to break out of the box
 Productivity, reallocation, and income distribution
 Productivity, allocation, and environmental sustainability
 Productivity, technology, and organization change
 Productivity, networks, and economic geography