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Title: Productivity Growth in Goods and Services across US States: What can We Learn from Factor Prices?

Citation Type: Miscellaneous

Publication Year: 2011

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Abstract: This paper exploits the dual accounting technique to estimate multi-factor productivity growth for goods and services across US states from 1980 to 2007. Due to changes in sectoral classifications, the period is divided into two parts, 1980-1997 and 1998-2007. Over both periods, states exhibit a wide range of productivity growth rates with the goods sector showing much larger variations. The variations are larger for the second time period with some states recording productivity growth as high as almost nine percent annually while other states showing declines at more than two percent. Underlying the wide variation in productivity growth are variations in both wage growth and real user cost growth. There is no evidence that even over the medium term the real user cost growth is zero. In fact since 1998, there is rapid decline of almost two per cent annually. Incorporating human capital into the analysis makes wage growth lower across the board; and productivity growth even lower in both sectors and on average negative in the second period for both sectors. Scaling up the analysis to the national level, we find that there are large differences in primal based measures of marginal product of capital and our estimate of real user cost growth. This can only be partially explained by the anomalous behavior of particular industries such as mining and real estate services, and to some degree due to thedeclining relative price of investment goods.

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Authors: Chanda, Areendam; Panda, Bibhudutta

Publisher: Wabash College

Data Collections: IPUMS CPS

Topics: Other

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