Learning and World War II Production Functions

Abstract

DURING World War II, shipbuilding output per man-hour evidenced a remarkable improvement. Between December 1941 and December 1944, man-hours required to produce a Liberty vessel, an emergency type developed for mass production, fell from an index value of 100 (December 1941 100) to 45, an increase in output per man-hour of 122 per cent, or an average annual increase of about 40 per cent.' Compared to the long-run improvement in man-hour productivity elsewhere in the United States economy the shipbuilding experience is impressive. Over the period 1909 to 1961, annual growth in output per man-hour, averaged over the entire economy, was 2.4 per cent.2 Even during a subperiod of rapid improvement, 1919-1929, and in a sector where improvement was most conspicuous, manufacturing, the average annual rate was only 5.6 per cent. In light of these figures, an explanation of the World War II shipbuilding productivity experience would be desirable, not only for its own sake but because it would shed light on secular forces constantly operating in the United States economy. An explanation is provided in this note with particular emphasis placed on the role of organizational and individual learning resulting from accumulated production experience.3 The extreme and unusual shipbuilding conditions that prevailed during World War II were conducive to extensive learning. New products were adopted, mass production techniques were introduced, labor inexperienced at shipbuilding was recruited, and the direction of production was placed in the hands of eminently successful managers who were, however, inexperienced at shipbuilding. This combination of unique events represents an extreme instance, which will facilitate the isolation of learning or adaptation effects from other effects, if learning is quantitatively important.

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