6533b833fe1ef96bd129c406

RESEARCH PRODUCT

Labor Productivity Growth: Disentangling Technology and Capital Accumulation

Michele BattistiChristopher F. ParmeterMassimo Del Gatto

subject

Counterfactual thinkingEconomics and EconometricsPublic economics05 social sciencesConvergence (economics)Oecd countriesjel:C14jel:D24Aggregate productivityjel:O41Capital accumulationTFP Aggregate productivity Technology Nonparametric estimation Convergence0502 economics and businessEconometricsEconomics050207 economicsjel:O47Settore SECS-P/01 - Economia PoliticaProductivityTotal factor productivity050205 econometrics Under Review [TFP Aggregate Productivity Technology Nonparametric Estimation Convergence Publication Status]

description

We adopt a counterfactual approach to decompose labor productivity growth into growth of Technological Productivity (TEP), growth of the capital-labor ratio and growth of Total Factor Productivity (TFP). We bring the decomposition to the data using international countrysectoral information spanning from the 1960s to the 2000s and a nonparametric generalized kernel method, which enables us to estimate the production function allowing for heterogeneity across all relevant dimensions: countries, sectors and time. As well as documenting substantial heterogeneity across countries and sectors, we nd average TEP to account for about 44% of labor productivity growth and TEP gaps with respect to the US to remain almost unchanged, on average, despite an average 1% yearly decrease in the labor productivity gap. The US displays the highest TEP growth rate. We then perform standard convergence regressions nding strong evidence of technological convergence and showing that the e ect of a few variables only, among those found significant to explain labor productivity convergence, occurs through the technology channel.

yearjournalcountryeditionlanguage
2014-09-30
http://bus.miami.edu/_assets/files/repec/WP2014-02.pdf