Sectoral Contributions to Total Factor Productivity: Another Perspective on the Growth Slowdown

A measure of direct and indirect sectoral contributions to total factor productivity growth is developed and estimated. The measure allows decomposition of productivity growth into changes caused by the input composition of specific sectors and the use of specific outputs by all sectors of the economy. Viewed in terms of input composition, increased requirements by energy, durable manufacturing, and nondurable manufacturing account for most of the productivity decline. For specific outputs, the direct and indirect demand for goods produced by wholesale and retail trade, construction, and energy is responsible.