>This year the average American worker will generate about $171,000 in economic output, compared with (on purchasing-parity terms) $120,000 in the euro area, $118,000 in Britain and $96,000 in Japan. That represents a 70% increase in labour productivity in America since 1990, well ahead of the increases elsewhere: 29% in Europe, 46% in Britain and 25% in Japan.
>A common riposte is that American productivity is exaggerated since American workers get much less holiday time than their peers abroad. But when assessed on a per-hour basis the gap remains sizeable: 73% productivity growth for American workers since 1990 versus 39% in the euro area, 55% in Britain and 55% in Japan (see chart). Another criticism is that productivity growth in America has steadily declined over the past couple of decades. That, however, has been true elsewhere as countries have grappled with ageing populations and what had seemed to be a maturing tech landscape. Productivity growth in America remains stronger than in most other economies.
>To explain this productivity outperformance, it is useful to break it into a few broad, overlapping categories. The first is investment in capital. American workers, simply put, have more tools at their disposal, both the physical kind such as highways and warehouses and the intangible sort in the form of software. Non-residential investment has run at about 17% of GDP in America since the mid-1990s, consistently higher than the share in large European economies, according to John Fernald of INSEAD, a business school in France. Moreover, much American business investment is the most potent kind: spending on research and development, which sows the seeds for future growth. With the exceptions of Israel and South Korea, America invests more in R&D than any other country, at roughly 3.5% of GDP. China is the one major power that has closed the gap on R&D spending, but it still trails America by a large absolute margin.
>America’s overall economic environment, often described as its business dynamism, is a second factor. One way of showing this is the churn rate among its companies, or the share that are created or dissolved in any given year. This has declined somewhat in America but is still nearly 20% of companies annually (roughly half are new businesses and the other half are those that stop operating). In Europe it is closer to 15%, according to the European Centre for International Political Economy, a think-tank. This difference reflects the twin facts that it is easier both for old firms to fold in America and for startups to obtain financing.
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>This year the average American worker will generate about $171,000 in economic output, compared with (on purchasing-parity terms) $120,000 in the euro area, $118,000 in Britain and $96,000 in Japan. That represents a 70% increase in labour productivity in America since 1990, well ahead of the increases elsewhere: 29% in Europe, 46% in Britain and 25% in Japan.
>A common riposte is that American productivity is exaggerated since American workers get much less holiday time than their peers abroad. But when assessed on a per-hour basis the gap remains sizeable: 73% productivity growth for American workers since 1990 versus 39% in the euro area, 55% in Britain and 55% in Japan (see chart). Another criticism is that productivity growth in America has steadily declined over the past couple of decades. That, however, has been true elsewhere as countries have grappled with ageing populations and what had seemed to be a maturing tech landscape. Productivity growth in America remains stronger than in most other economies.
>To explain this productivity outperformance, it is useful to break it into a few broad, overlapping categories. The first is investment in capital. American workers, simply put, have more tools at their disposal, both the physical kind such as highways and warehouses and the intangible sort in the form of software. Non-residential investment has run at about 17% of GDP in America since the mid-1990s, consistently higher than the share in large European economies, according to John Fernald of INSEAD, a business school in France. Moreover, much American business investment is the most potent kind: spending on research and development, which sows the seeds for future growth. With the exceptions of Israel and South Korea, America invests more in R&D than any other country, at roughly 3.5% of GDP. China is the one major power that has closed the gap on R&D spending, but it still trails America by a large absolute margin.
>America’s overall economic environment, often described as its business dynamism, is a second factor. One way of showing this is the churn rate among its companies, or the share that are created or dissolved in any given year. This has declined somewhat in America but is still nearly 20% of companies annually (roughly half are new businesses and the other half are those that stop operating). In Europe it is closer to 15%, according to the European Centre for International Political Economy, a think-tank. This difference reflects the twin facts that it is easier both for old firms to fold in America and for startups to obtain financing.
[Economist playing both sides](https://www.reddit.com/r/neoliberal/s/C65fOJj0ci)