Should-Read: A very interesting paper by very sharp people. The problem is that I do to know what it means. The post-2000 period has one huge, huge, huge shock in it: 2008-2009. How is the fact that the post-2000 sample has a Great Recession in it and the pre-2000 does not affect their conclusions? I don’t know. And I don’t think they know: Ryan A. Decker, John C. Haltiwanger, Ron S. Jarmin, and Javier Miranda: Changing Business Dynamism and Productivity: Shocks vs. Responsiveness: “The pace of job reallocation has declined in all U.S. sectors since 2000…

…In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on aggregate productivity…