Mizobuchi, Hideyuki (2010): New indices of labour productivity growth: Baumol’s disease revisited.
Download (438kB) | Preview
We introduce two new indexes of labour productivity growth. Both indexes are intended to capture the shift in the short-run production frontier, which can be attributed to technological progress or growth in capital inputs. The two indexes adopt distinct approaches to measuring the distance between the production frontiers. One is based on the distance function and the other is based on the profit function. In the end, we show that these two theoretical measures coincide with the index number formulae that are computable from the observable prices and quantities of output and input. By applying these formulae to the U.S. industry data of the years 1970–2005, we compare newly proposed index of labour productivity growth with the growth of average labour productivity over periods and across industries. We revisit the hypothesis of Baumol’s disease throughout our observations on the trend of industry labour productivities in the service sector.
|Item Type:||MPRA Paper|
|Original Title:||New indices of labour productivity growth: Baumol’s disease revisited|
|Keywords:||Labour productivity, index numbers, Malmquist index, Törnqvist index, output distance function, input distance function, Baumol’s disease, service sector|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O51 - U.S. ; Canada
D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity
A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics
|Depositing User:||Hideyuki Mizobuchi|
|Date Deposited:||27. May 2011 13:00|
|Last Modified:||28. May 2015 08:45|
Balk, B.M. (2000), “Divisia Price and Quantity Indexes: 75 Years After”, Department of Statistical Methods, Statistics Netherlands
Bosworth, B.P. and J.E. Triplett (2007), “The Early 21st Century U.S. Productivity Expansion is Still in Services”, International Productivity Monitor 14, 3-19.
Caves, D.W., L. Christensen and W.E. Diewert (1982), “The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity”, Econometrica 50, 1393-1414.
Chambers, R.G. (1988), Applied Production Analysis: A Dual Approach, New York: Cambridge University Press.
Diewert, W.E. (1974), “Applications of Duality Theory,”, in M.D. Intriligator and D.A. Kendrick (ed.), Frontiers of Quantitative Economics, Vol. II, Amsterdam: North-Holland, pp. 106-171.
Diewert, W.E. (1976), “Exact and Superlative Index Numbers”, Journal of Econometrics 4, 114-145.
Diewert, W.E. (1978), “Superlative Index Numbers and Consistency in Aggregation”, Econometrica 46, 883-900.
Diewert, W.E. and C.J. Morrison (1986), “Adjusting Output and Productivity Indexes for Changes in the Terms of Trade”, Economic Journal 96, 659-679.
Diewert, W.E. and A.O. Nakamura (2007), “The Measurement of Productivity for Nations”, in J.J. Heckman and E.E. Leamer (ed.), Handbook of Econometrics, Vol. 6, Chapter 66, Amsterdam: Elsevier, pp. 4501-4586.
Fare, R.S. Grosskopf, M. Norris and Z. Zhang (1994), “Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries”, American Economic Review 84, 66-83.
Griliches, Z. (1987), “Productivity: Measurement Problems”, pp. 1010-1013 in J. Eatwell, M. Milgate and P. Newman (ed.), The New Palgrave: A Dictionary of Economics. New York: McMillan.
Hotelling, H. (1932), “Edgeworth’s Taxation Paradox and the Nature of Demand and Supply Functions”, Journal of Political Economy 40, 577-616.
Hulten, C.R. (1978), “Growth Accounting with Intermediate Inputs”, Review of Economic Studies 45, 511-518. Jorgenson, D.W., M.S. Ho and K.J. Stiroh (2008), “A Retrospective Look at the U.S. Productivity Growth Resurgence”, Journal of Economic Perspective 22, 3-24.
Kohli, U. (2004b), “Real GDP, Real Domestic Income and Terms of Trade Changes”, Journal of International Economics 62, 83-106.
Nin, A.C. Channing, T.W. Hertel, and P.V. Preckel (2003), “Bridging the Gap between Partial and Total Factor Productivity Measures Using Directional Distance Functions”, American Journal of Agricultural Economics 85, 928-942.
O’Mahony, M. and M.P. Timmer (2009), “Output, Input and Productivity Measures at the Industry Level: the EU KLEMS Database”, Economic Journal 119, F374-F403.
Samuelson, P.A. (1953), “Prices of Factors and Goods in General Equilibrium”, Review of Economic Studies 21, 1-20.
Triplett, J.E. and B.P. Bosworth (2004), Services Productivity in the United States: New Sources of Economic Growth, Washington, D.C.: Brookings Institution Press.
Triplett, J.E. and B.P. Bosworth (2006), “‘Baumol’s Disease’ Has Been Cured: IT and Multi-factor Productivity in U.S. Services Industries”, The New Economy and Beyond: Past, Present, and Future. Dennis W. Jansen, (eds.), Cheltenham: Edgar Elgar.