Drift and breaks in labor productivity

We use endogenous break tests, and the Stock-Watson TVP-MUB methodology, to investigate changes in the equilibrium rate of growth of labor productivity in the U.S., the Eurozone, the U.K., Australia, and Japan since WWII. Results for the U.S. well capture the 'conventional wisdom' of a golden era of high productivity growth, the 1950s and 1960s; a marked deceleration starting from the beginning of the 1970s; and a strong growth resurgence starting from mid-1990s. Results for the Eurozone point towards a deceleration since the early 1980s, with the equilibrium rate of growth of output per hour falling to 0.9% in 2004:4.