First, it is based on manufacturing, which has been a minority of economic activity throughout the period it discusses. To explain anything, it needs to explain services.
Second, the model is too elaborate and depends on a hard-to-measure variable (saturation).
Let's use a really simple model in which work (service work) is made up of two tasks, decision-making and communication.
Recall that 1995-2004 is the exact period when cell phones and email diffused throughout the economy. These improved the rate at which communication tasks could be completed, so productivity grew in this task. But as with everything there are diminishing returns to further improvement.
The other task, decision-making, is much more varied, being different for truck drivers, real estate agents, nurses, and yoga instructors (to select a few examples). Increasing productivity in the decision-making task across the whole economy is much harder, which is why productivity growth has slowed down.
First, it is based on manufacturing, which has been a minority of economic activity throughout the period it discusses. To explain anything, it needs to explain services.
Second, the model is too elaborate and depends on a hard-to-measure variable (saturation).
Let's use a really simple model in which work (service work) is made up of two tasks, decision-making and communication.
Recall that 1995-2004 is the exact period when cell phones and email diffused throughout the economy. These improved the rate at which communication tasks could be completed, so productivity grew in this task. But as with everything there are diminishing returns to further improvement.
The other task, decision-making, is much more varied, being different for truck drivers, real estate agents, nurses, and yoga instructors (to select a few examples). Increasing productivity in the decision-making task across the whole economy is much harder, which is why productivity growth has slowed down.