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Title: Productivity Growth of US States

Citation Type: Dissertation/Thesis

Publication Year: 2010

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Abstract: This dissertation makes a contribution to regional studies by constructing Multi-FactorProductivity (MFP) growth measures at the state level for the US. The first essay of thedissertation exploits a dual growth accounting technique to calculate sector-specific MFPgrowth for all US states from 1980 onwards. In the process, the essay contributes by constructinga data set on the state level real user cost of capital paying particular attentionto inter-state variations in the composition of output, relative prices of investment goods,effective corporate taxes, and inflation rates for the manufacturing and service sectors. Someof the key implications of our analysis are: a) The contribution of MFP growth in drivinglabor productivity is higher in the manufacturing sector compared to the service sector; b)The source of divergence between the primal and dual measures of MFP growth originatesfrom inconsistencies between the constructed real user cost and the implied real user costof Bureau of Economic Analysis; c) The real user cost for the service sector demonstratesnegative growth rate resulting from a rapid decline in the relative price ratio of investmentgoods providing support for Investment Specific Technological Change and also implyinghigh rates of capital accumulation; d) The average growth in the real user cost of capital isnon-zero and shows wide variability across states for both the sectors.The primary focus of the second essay is to capture the positive impacts of schoolingand Research and Development (R&D) expenditure on MFP growth for US states. Whilethe evidence for positive externalities from schooling has been disappointing in the regionalliterature, the evidence of externalities from R&D is seldom found at the state level in US.The essay argues that a state with higher level of education not only creates better ideas, butalso is more favorable to adopt, implement and execute the newly available ideas and hence,to absorb the knowledge spillovers. Further, it is argued that the states with favorable R&Dpolicies attract more efficient firms and hence, experience higher MFP growth. To achievethis, the essay extends the dual accounting exercise to construct MFP growth measuresfor the non-farm, non-mining, private sector for all US states and successfully establishesthe superiority of the dual measures. The empirical exercise documents significant positiveexternalities from schooling and R&D only after controlling the catch-up effect where poorstates converge towards the rich states and attributes an important role to schooling andR&D in speeding up this process.

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Authors: Panda, Bibhudutta

Institution: Louisiana State University

Department: Agricultural and Mechanical College

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Degree: Doctor of Philosophy

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Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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