Productivity and the pandemic: short-term disruptions and long-term implications: The impact of the COVID-19 pandemic on productivity dynamics by industry

This paper analyses quarterly estimates of productivity growth at industry level for three advanced economies, France, the UK and the US, for 2020. We use detailed industry-level data to distinguish reallocations of working hours between industries from pure within-industry productivity gains or losses. We find that all three countries showed positive growth rates of aggregate output per hour in 2020 over 2019. However, after removing the effects from the reallocation of hours between low and high productivity industries, only the US still performed positively in terms of within-industry productivity growth. In contrast, the two European economies showed negative within-industry productivity growth rates in 2020. While above-average digital-intensive industries outperformed below-average ones in both France and the UK, the US showed higher productivity growth in both groups compared to the European countries. Industries with medium-intensive levels of shares of employees working from home prior to the pandemic made larger productivity gains in 2020 than industries with the highest pre-pandemic work-from-home shares. Overall, after taking into account the productivity collapse in the hospitality and culture sector during 2020, productivity growth shows no clear deviation from the slowing pre-pandemic productivity trend. Future trends in productivity growth will depend on whether the favourable productivity gains (or smaller losses) in industries with above-average digital intensity will outweigh negative effects from the pandemic, in particular scarring effects on labour markets and business dynamics. © 2021, The Author(s).

Putting Together the Pieces of the Productivity Puzzle: Review Article of Productivity Perspectives and Productivity and the Pandemic

The productivity puzzle in the UK may have taken a turn with the arrival of the COVID-19 crisis although we do not know at this point whether it will be for the better or the worse. The two edited volumes discussed in this review article are distinguished by the first being produced just before the pandemic, and the second in the midst of it. Together, the volumes address a broad range of economic, social and policy issues related to the productivity puzzle in the UK, with a strong focus on organizations, management, entrepreneurship, innovation and skills. In addition to examining productivity growth at the firm level, the volumes also analyze differences in productivity and income between firms, workers and regions. There is also a strong plea for a system-based approach to policy making for productivity. On the whole, the contributors take a cautious approach on how much the pandemic will change productivity performance in the medium-term, but they argue strongly in favour of active policy intervention to mitigate the damage arising from the pandemic and create better conditions for a sustained productivity revival.