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Title: Explaining the Productivity Differences: the Importance of Black-White Schooling Differences

Citation Type: Conference Paper

Publication Year: 2009

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Abstract: Using a newly created data set containing real output per worker, real physical capital perworker and human capital per worker for US states from 1840 to 2000, Turner et. al (2007b)analyzed the growth rates of aggregate inputs and total factor producvity (TFP). Given thatinstiutional differences across states are likely to be smaller than those observed across countries,the result that variation in TFP still accounts for the lions share of variation in output growthis somewhat surprising. We continue this line of work by documenting the importance of TFP inexplaining cross sectional variation in the levels of log income. We also consider the possibilitythat one major institutional difference across states, slavery, might explain TFP differencesacross states. To this end, we create and present a new state level measure of years of schoolingby race from 1840 - 2000. Again, surprisingly, exploiting this series has very little impact on theupper bound of the fraction of income variation that can be explained by inputs. Thus as inLucas (1988) and Prescott (1998), the mystery of TFP remains. We do, however, find supportfor external effects of physical and human capital, as suggested by Romer (1986,1990), Lucas(1988), and Tamura (2002,2006).

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Authors: Mulholland, Sean; Baier, Scott; Tamura, Robert; Turner, Chad

Conference Name: 4th Economic Development Conference

Publisher Location: Clemson University, Clemenson, SC

Data Collections: IPUMS USA

Topics: Race and Ethnicity

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