The role of output composition in the stabilization of US output growth

US output growth became much more stable over the past half-century. This paper assesses the role of changes in the composition of output-the increasing importance of stable sectors and diminishing importance of volatile sectors-in this stabilization. Our decomposition of output growth volatility by one-digit industry indicates that a bit less than half of the drop in volatility between the pre- and post-1982 periods is accounted for by compositional shifts, most notably the decline of manufacturing.