Labor productivity growth

disentangling technology and capital accumulation

Michele Battisti, Massimo Del Gatto, Christopher Parmeter

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

How much of the convergence in labor productivity that we observe in manufacturing is due to convergence in technology versus convergence in capital-labor ratios? To shed light on this question, we introduce a nonparametric counterfactual decomposition of labor productivity growth into growth of the capital-labor ratio (K/L), technological productivity (TEP) and total factor productivity (TFP). Our nonparametric specification enables us to model technology allowing for heterogeneity across all relevant dimensions (i.e. countries, sectors and time). Using data spanning from the 1960s to the 2000s, covering 42 OECD and non OECD countries across 11 manufacturing sectors, we find TEP and TFP to account for roughly 46 and −6% of labor productivity growth respectively, on average. While technological growth at the world level is driven primarily by the US and a handful of other OECD countries, we find strong evidence of convergence in both technology and capital-labor ratios. Interestingly, very few of the usual growth determinants are found to enhance the process of technological catching-up.

Original languageEnglish (US)
Pages (from-to)111-143
Number of pages33
JournalJournal of Economic Growth
Volume23
Issue number1
DOIs
StatePublished - Mar 1 2018

Fingerprint

Productivity growth
Labour productivity
Capital accumulation
Labor
Productivity
Total factor productivity
OECD countries
Decomposition
Manufacturing
Manufacturing sector
Catching-up

Keywords

  • Aggregate productivity
  • Convergence
  • Nonparametric estimation
  • Technology
  • TFP

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Labor productivity growth : disentangling technology and capital accumulation. / Battisti, Michele; Del Gatto, Massimo; Parmeter, Christopher.

In: Journal of Economic Growth, Vol. 23, No. 1, 01.03.2018, p. 111-143.

Research output: Contribution to journalArticle

Battisti, Michele ; Del Gatto, Massimo ; Parmeter, Christopher. / Labor productivity growth : disentangling technology and capital accumulation. In: Journal of Economic Growth. 2018 ; Vol. 23, No. 1. pp. 111-143.
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