What the study found
The paper finds that roughly two-thirds of the productivity slowdown in the United States during the 1970s and 2000s can be explained by a lack of improvement in allocative efficiency, which means how well resources are distributed across sectors.
Why the authors say this matters
The authors conclude that allocative efficiency is an important part of understanding the productivity slowdown, and they suggest that changes in sector-level volatility are linked to worsening allocative efficiency.
What the researchers tested
The researchers extended the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and to decompose aggregate productivity growth in a multisector economy.
What worked and what didn't
The decomposition shows a substantial role for allocative efficiency in explaining the slowdown. The data also show that increased sector-level volatility is associated with a deterioration of allocative efficiency.
What to keep in mind
The abstract does not describe additional limitations or caveats beyond the scope of the analysis of U.S. productivity slowdown in the 1970s and 2000s.
Key points
- About two-thirds of the U.S. productivity slowdown is explained by lack of improvement in allocative efficiency.
- Allocative efficiency here means how resources are distributed across sectors.
- The study extends the framework of Oberfield (2013) to analyze a multisector economy.
- Higher sector-level volatility is associated with deterioration in allocative efficiency.
- The abstract does not state additional limitations.
Disclosure
- Research title:
- Allocative efficiency explains much of the U.S. productivity slowdown
- Publication date:
- 2026-02-01
- DOI:
- 10.1111/caje.70046
- OpenAlex record:
- View
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