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Allocative efficiency and the productivity slowdown

Lin Shao & Rongsheng Tang

Canadian Journal of Economics / Revue Canadienne D'Economique2026https://doi.org/10.1111/caje.70046article
AJG 3ABDC A
Weight
0.50

Abstract

This paper evaluates the contribution of cross‐sector allocative efficiency to the productivity slowdown in the US during the 1970s and 2000s. We extend the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and decompose aggregate productivity growth in a multisector economy. We find approximately two‐thirds of the productivity slowdown can be explained by the lack of improvement in allocative efficiency. Furthermore, data shows that increased sector‐level volatility is associated with the deterioration of allocative efficiency.

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https://doi.org/https://doi.org/10.1111/caje.70046

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@article{lin2026,
  title        = {{Allocative efficiency and the productivity slowdown}},
  author       = {Lin Shao & Rongsheng Tang},
  journal      = {Canadian Journal of Economics / Revue Canadienne D'Economique},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/caje.70046},
}

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Allocative efficiency and the productivity slowdown

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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