The role of resource misallocation in productivity decreases since the 2007 financial crisis

Since the financial crisis of 2007, productivity growth has been slowing in all the major economies for unknown reasons, and in 2016, labor productivity in the U.S. recorded negative growth for the first time in 30 years. Part of the explanation of this productivity puzzle in advanced economies may lie in a generalized difficulty of reallocating resources between firms in the same industry and in the same geographical area, according to a new study by Gianmarco Ottaviano, Professor of Economics at Bocconi University, and colleagues. Surprisingly, more difficulties have been recorded in reallocating resources in industries where technology has been changing faster rather than between sectors with different speeds of technological change.

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