Missing Growth from Creative Destruction

The paper to be presented: “Missing Growth from Creative Destruction”  (joint with Philippe Aghion, Antonin Bergeaud, Peter J. Klenow, and Huiyu Li)

Abstract: When products exit due to entry of better products from new producers, statistical agencies typically impute inflation from surviving products. This understates growth if creatively-destroyed products improve more than surviving products do. Accordingly, the market share of surviving products should shrink. Using entering and exiting establishments to proxy for creative destruction, we estimate missing growth in U.S. Census data on non-farm businesses from 1983–2013. We find: (i) missing growth is substantial — around half a percentage point per year; but (ii) missing growth did not accelerate much after 2005, and therefore does not explain the sharp slowdown in growth since then.