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Is U.S. Productivity Hiding Overseas?

May 17, 2017
Offshore Profit Shifting
and Domestic Productivity

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Official statistics show a significant slowdown in U.S. aggregate productivity growth that begins in 2004. New research by Fatih Guvenen and his co-authors investigates a source of mismeasurement in official statistics, which arises from offshore profit-shifting by multinational enterprises operating in the United States.

Profit-shifting activity has increased significantly since the mid-1990s, resulting in an understatement of measured U.S. aggregate productivity growth. The adjustments are especially large in R&D-intensive industries, which are most likely to produce intangible assets that are easy to move across borders.

Their research was recently profiled in the Wall Street Journal (article 1 and article 2), Bloomberg and on CNBC.

Fatih Guvenen is a professor of economics at the University of Minnesota

Raymond J. Mataloni, Jr. is an economist at the Bureau of Economic Analysis

Dylan G. Rassier is an economist at the Bureau of Economic Analysis

Kim J. Ruhl is an associate professor of economics at Pennsylvania State University and graduated from the University of Minnesota's Ph.D. program