Is this time really dierent? Long term macroeconomic paerns in the US economy G. Dosi M. E. Virgillito Scuola Superiore Sant Anna (R)EVOLUTION ROAD Turin, 25 October G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 1 / 17
Is this time really dierent? The Industrial Revolution was no marriage party for the working classes: it was largely an era of degradation of social conditions and it took decades for productivity growth to trickle down to the working classes. Today there are worrying factors which hint that it might not be so in near future. And they have to do with both the impact of the new technologies and, even more so, with the ways the old socio-economic regime, call it Fordist, progressively exhausted its driving force. G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 2 / 17
Some long term paerns 1 Stagnant wages and divergence between productivity growth and wage growth 2 De-industrialization 3 Declining labour share 4 Massive surge in corporate profits, especially financial ones 5 Declining labour force participation 6 Declining business dynamism and net job creation 7 Soaring inequality 8 Polarization and growing number of part-time jobs (gig-economy) G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 3 / 17
The wage productivity gap in the US Economy G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 4 / 17
Real wage growth 1973-2012 Figure: Source: Economic Policy Institute G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 5 / 17
Real wage growth 2007-2012 Figure: Source: Economic Policy Institute G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 6 / 17
Decline of manufacturing shares 40 Percent of Employment in Manufacturing in Germany (DISCONTINUED) Percent of Employment in Manufacturing in Italy (DISCONTINUED) Percent of Employment in Manufacturing in the United States (DISCONTINUED) Percent of Employment in Manufacturing in France (DISCONTINUED) Percent of Employment in Manufacturing in the United Kingdom (DISCONTINUED) 35 30 Percent 25 20 15 10 5 1970 1975 1980 1985 1990 1995 2000 2005 2010 fred.stlouisfed.org myf.red/g/5awa G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 7 / 17
Decline of labour compensation shares 0.90 Share of Labour Compensation in GDP at Current National Prices for Germany Share of Labour Compensation in GDP at Current National Prices for United States Share of Labour Compensation in GDP at Current National Prices for Italy Share of Labour Compensation in GDP at Current National Prices for France Share of Labour Compensation in GDP at Current National Prices for China 0.85 0.80 0.75 Percent 0.70 0.65 0.60 0.55 0.50 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 fred.stlouisfed.org myf.red/g/5awx G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 8 / 17
Surge of profits Corporate Profits After Tax (without IVA and CCAdj) 2,000 1,800 1,600 1,400 Billions of Dollars 1,200 1,000 800 600 400 200 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: US. Bureau of Economic Analysis fred.stlouisfed.org myf.red/g/4jqk G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 9 / 17
Declining labor force unionization rate G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 10 / 17
Declining Job creation rate Figure: Source: Decker, Haltiwanger et al, G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 11 / 17
Jobless recovery Figure: Source: U.S. Bureau of Labor Statistics G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 12 / 17
Polarization Figure: Source: Jaimovich and Siu, 2014 G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 13 / 17
Declining job participation rate 68 Civilian Labor Force Participation Rate 67 66 65 64 Percent 63 62 61 60 59 58 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: US. Bureau of Labor Statistics fred.stlouisfed.org myf.red/g/4kpd G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 14 / 17
Increasing trend in self-employment (Katz and Kreuger, 2015) 18 16 14 12 10 Figure 1: Trends in Self-Employment Percent of CPS Total Employed 8 6 4 2 Schedule C Filings CPS Unincorporated Self-Employed 0 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 41 CPS Total Self-Employed Note: Shading denotes recession. Source: Current Population Survey; IRS Statistics of Income Publication 1304 (Table 1.3). 2014 2015 2015 G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 15 / 17
What do unions do? Figure: The beneficial eects of unionization - Freeman, 1980, JOLE G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 16 / 17
Conclusion (R)evolution road? Whatever the future, these are the initial conditions of the path. Be careful to not overstate technological factors alone...socio and macroeconomic conditions are equally relevant. G. Dosi (SSSUP) The IV Industrial Revolution Turin, 25 October 17 / 17