Chapter

A Perspective on What We Know About the Sources of Productivity Growth

Edited by Zvi Griliches

in New Developments in Productivity Analysis

Published by University of Chicago Press

Published in print August 2001 | ISBN: 9780226360621
Published online February 2013 | e-ISBN: 9780226360645 | DOI: http://dx.doi.org/10.7208/chicago/9780226360645.003.0015
A Perspective on What We Know About the Sources of Productivity Growth

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More than 30 years ago, Dale Jorgenson and the author looked at data on productivity and saw the challenge in the then unmeasured education and R&D contributions. Their paper “explained” it all away by correcting for various measurement errors in capital and labor input. This chapter comments on how well the paper has held up over the years and provides insight into difficult measurement problems that are presently retarding progress in understanding productivity trends. It presents three key points. The first is that the current accounting framework is incomplete. There are a number of productivity enhancing activities that use resources and maintain and improve human capital but are not included in official notions of national output. The second point is that longer term productivity growth comes from the discovery of new resources, new methods of doing things, and the exploitation of investment opportunities that such discoveries create. The third point is that in the 1960s, they were struggling with the large unexplained residual. Most of the observed growth was not accounted for by the then-standard input measures. In the last twenty or more years, most of the residual has disappeared.

Keywords: investment opportunities; capital; labor; productivity growth; national output; residual

Chapter.  1646 words. 

Subjects: Econometrics and Mathematical Economics

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