Labor productivity growth: disentangling technology and capital accumulation

How much of the convergence in labor productivity that we observe in manufacturing is due to convergence in technology versus convergence in capital-labor ratios? To shed light on this question, we introduce a nonparametric counterfactual decomposition of labor productivity growth into growth of the capital-labor ratio (K/L), technological productivity (TEP) and total factor productivity (TFP). Our nonparametric specification enables us to model technology allowing for heterogeneity across all relevant dimensions (i.e. countries, sectors and time). Using data spanning from the 1960s to the 2000s, covering 42 OECD and non OECD countries across 11 manufacturing sectors, we find TEP and TFP to account for roughly 46 and ?6% of labor productivity growth respectively, on average. While technological growth at the world level is driven primarily by the US and a handful of other OECD countries, we find strong evidence of convergence in both technology and capital-labor ratios. Interestingly, very few of the usual growth determinants are found to enhance the process of technological catching-up.     

Sources of energy productivity growth and its distribution dynamics in China

The purposes of this paper are to determine the sources of energy productivity growth at the provincial level in China and to examine the relative contributions of the sources and their impacts on regional inequality. Energy productivity change is first decomposed into five components attributable to changes in capital–energy ratio, labor–energy ratio, output structure, and technical efficiency change and technological change. Then a nonparametric analysis is implemented to statistically test the relative contributions of the components and their roles in the distribution dynamics of energy productivity. It is found that (1) changes in capital–energy ratio, output structure, and technological change contribute to energy productivity growth in China, (2) increase in capital–energy ratio caused by capital accumulation is the primary driving force for energy productivity growth, and (3) capital accumulation contributes to energy productivity convergence between Chinese provinces over the time period of 1990–2005.     

Productivity growth and catching up: a technology gap explanation

This paper seeks to explain why some countries have managed to catch up in terms of labor productivity over the period 1993–2007 in 76 countries. By integrating the technology gap research within the standard growth-accounting approach, we introduce a methodology which allows us to split total factor productivity (TFP) change into two components: conditional technical inefficiency and the magnitude of the technology gap. We find that labor productivity growth depends both on investment in fixed capital and TFP. Fast emerging economies exhibit patterns of growth based in particular on the reduction of the technology gap, confirming the role of investment in technological capabilities to spur productivity catch-up. Looking at change in the distribution of labor productivity, emerging countries managed to shift from low productivity toward a medium level of productivity thanks to technology accumulation. Less advanced countries cannot rely only on technology diffusion and learning by doing, policies for technological capabilities accumulation are necessary.     

HUMAN CAPITAL AND CONVERGENCE: A PRODUCTION‐FRONTIER APPROACH*

Using nonparametric, production‐frontier methods, we decompose labor productivity growth into components attributable to technological change (shifts in the world production frontier), technological catch‐up (movements toward or away from the frontier), and physical and human capital accumulation (movements along the frontier). We find that (1) technological change is decidedly nonneutral, (2) productivity growth is driven primarily by physical and human capital accumulation, (3) the increased international dispersion of productivity is explained primarily by physical capital accumulation, and (4) international polarization (the shift from a unimodal to a bimodal distribution) is brought about primarily by efficiency changes (technological catch‐up).     

Industrial development in Malaysia and Singapore: Empirical analysis with multiple‐cone Heckscher–Ohlin Model

This paper employs the multiple‐cone Heckscher–Ohlin model to analyze industrial development in Malaysia and Singapore. In particular, we focus on industrial upgrading along with capital accumulation as a key determinant for the cross‐country difference in production technology and income. By pooling two countries’ data on factor endowment and sectoral output in manufacturing from 1990 to 2008, we estimate the common industrial development paths of the two‐cone Heckscher–Ohlin model, the Rybczynski linear relationship between capital–labor ratio and sectoral output per capita. Our results demonstrate that, after controlling for quality of workers (by educational attainment), the two countries resided in different cones during our sample period, implying that Singapore succeeded in accumulating capital steadily with the support of foreign investment and upgrading its industry mix to make it more capital‐intensive. The separation of cones is also consistent with the observed gap in gross domestic product per capita between the two countries. Furthermore, we implement a factor‐augmenting productivity test to see the gaps in efficiency of capital and human‐capital‐augmented labor and confirm no significant difference between the two countries.     

Soaring dragons,roaring tigers,growling bears

We perform a comparative analysis of regional growth and convergence in China, Russia and India over the period 1993–2003 by means of non‐parametric methods and kernel density estimates. Our results indicate that wealthy regions were largely responsible for the rapid growth in all three countries. For China and India, capital dissipation was identified as the major determinant of regional growth. In Russia, capital deepening impeded positive changes in labour productivity, leaving technological change as the only source of regional growth. Furthermore, we find that the increasing regional income inequality in all three countries was driven by technological change which more than offset the convergence resulting from capital deepening in China and India.     

Productivity,technical efficiency and technological change in French agriculture during 2002-2015: a Färe-Primont index decomposition using group frontiers and meta-frontier

The objective of the article is to assess productivity change in French agriculture during 2002–2015; namely, total factor productivity (TFP) change and its components – technological change and efficiency change. For this, we use the Färe-Primont index which verifies the multiplicatively completeness property and is also transitive, allowing for multi-temporal and -lateral comparisons. We investigate the extent of heterogeneity within each type of farming sub-sample in terms of TFP change, with the help of the Herfindahl-Hirschman index (HHI). In addition, to compare the technologies among the five types of farming considered, we extend our analysis to the meta-frontier framework. Results indicate that during 2002–2015, all farms experienced TFP progress. The smallest average increase was experienced by the dairy farms and the largest by the field crop farms and the beef farms. The latter had the strongest technological progress but a deterioration in efficiency, while the opposite was found for field crop farms. The analysis of HHI reveals that sheep or goat farms are the most homogenous in terms of the direction of TFP change experienced over the period 2002–2015. The meta-frontier analysis shows that field crop farms’ technology is the most productive of all the types of farming.     

总需求、国际贸易与我国省际生产率变化——基于省际面板数据的研究

全要素生产率的提高是促进经济持续增长的重要原因,对生产率的研究,主要是从供给方面展开的,本文试图从需求角度研究全要素生产率变动的原因。理论上看,总需求通过影响技术创新、技术选择、规模经济效益和要素的使用效率等途径引起生产率的变化,国际贸易则通过促进分工深化、产生技术溢出等促进生产率的提高。然后,本文采用数据包络分析方法测算了中国省际全要素生产率变化,并将其分解为技术效率的变化和技术进步。结果发现中国改革开放以来全要素生产率增长主要是技术进步的结果,技术效率的作用很小。在测算和分解的基础上,利用省际面板数据,就总需求和国际贸易对生产率增长的影响作了实证分析,发现最终消费和资本形成对技术进步和全要素生产率的提高作用显著,出口对生产率增长的作用不显著,进口显著地促进了省际全要素生产率增长和技术进步。     

Capital–Skill Complementarity: Does Capital Composition Matter?

We estimate the effect of capital composition on the size of capital–skill complementarity and the skill wage premium. Disaggregating the capital stock into different types according to technological content, we find that: capital is more of a q‐complement to skilled labor than to unskilled labor; the higher the technological component of capital, the larger the size of the relative q‐complementarity between capital and skilled labor; and replacing non‐technological with technological capital might increase the skill wage premium by about 9 percent. Our results highlight that changes in capital composition matter for understanding changes in the skill wage premium.     

中国省区经济增长分布的演进(1978-1998)

该文发现,进入20世纪90年代,我国省区经济增长分布从单峰状逐渐演进为双峰状,趋同文献把这种现象称为双峰趋同.该文采用数据包络法(DEA)把我国30个省区的增长归因于物质资本、人力资本和技术进步、技术转移(效率提高),探索我国省区增长分布演进的机制,发现物质资本主导着我国省区经济增长分布的演进,而且该发现是相当稳健的.     

技术变化与收入分配

本文以20世纪70年代的信息技术革命为背景，运用美国商务部经济统计局生产率数据库，在此较五，六十年代和七、八十年代工资结构的基础上，提出了一个简单的技术变化模型。通过模型以及与经验观察相一致的实证研究，指出技术变化引起工人工资不平等的两种渠道；直接的途径是对于既定的资本劳动力比率来说，新技术能生产更多的产量；间接的途径是资本从非技能工人流向技能工人，从而使得前者的人均资本在技术变化前变得更少，本文的结论是：运用革命性的新技术对传统行业进行改造，构成了经济增长的最终主体，人力资本水平之高低越来越影响到最终经济的财富的总量。     

When does a developing country use new technologies?

We develop a model of optimal pattern of economic development that is first rooted in physical capital accumulation and then in technical progress. We study an economy where capital accumulation and innovative activity take place within a two sector model. The first sector produces a consumption good using physical capital and non skilled labor. Technological progress in the consumption sector is driven by the research activity that takes place in the second sector. Research activity which produces new technologies requires technological capital and skilled labor. New technologies induce an endogenous increase of the total factor productivity of the consumption sector. Physical and technological capital are not substitutable while skilled and non skilled labor may be substitutable. We show that under conditions about the adoption process of new technologies, the optimal strategy for a developing country consists in accumulating physical capital first; postponing the importation of technological capital to the second stage of development. This result is due to a threshold effect from which new technologies begin to have an impact on the productivity of the consumption sector. However, we show that once a certain level of wealth is reached, it becomes optimal for the economy to import technological capital to produce new technologies. The authors would like to thank the participants to the seminar of GREDEG, especially Richard Arena, Flora Bellone, Jean-Luc Gaffard and Jacques Ravix, and also the participants to a seminar at European University Institute. We are also grateful to the referees for their very thoughtful remarks and criticisms. Cuong Le Van started writing this joint paper with Olivier Bruno and Benoit Masquin in 2005, in GREDEG.     

Trade,Wages, and Specific Factors*

In this paper, we use a multisector specific‐factors model with sector‐specific capital and two mobile factors, skilled and unskilled labor, to examine the effects of trade, technology, and factor endowments on the skill premium in US manufacturing industries. Based on this model and data for the US manufacturing sector from 1958–96, we calculate changes in the skill premium and then carry out a decomposition to identify the changes caused by product price changes (trade), technological progress, labor, and capital endowment changes. The decomposition reveals that trade effects, working through product price changes, caused the skill premium to increase moderately. Changes in capital endowments (new investments) had a positive effect on the skill premium, with the strongest impact during the 1980s, while the effect of technological change on the skill premium varied over time. Finally, changes in relative labor endowments had a negative effect on the skill premium.     

技术进步、工资差距与人力资本形成

本文在劳动力异质的假设下通过建立一个二元经济模型分析发展中国家技术进步与收入差距的关系,结果显示技术进步主要通过直接和间接两种途径影响收入差距:其一,通过提高相应劳动力的劳动效率,提高其工资;其二,通过收入差距的扩大,吸引劳动力进行人力资本投资,从而劳动效率的提高,影响其收入.并得也结论,不同类型的技术进步对收入差距的影响存在较大差异,而这种差异在某种程度上影响人力资本投资,因此,在城乡转化的过程中,要缩小收入差距必须选择适当的技术进步,而且还要结合长期经济发展注意保持相应的收入差别.     

A metafrontier approach for measuring Malmquist productivity index

This paper presents an alternative framework for the decomposition of the Malmquist productivity index by using the concept of a metafrontier. The approach employed allows the calculation of technical efficiency changes, as well as technical changes, for economic agents operating under different technologies. It also enables the computation of the technological gap and its changes for economic agents operating under different technologies. This framework is applied to the analysis of panel data on 58 countries over a period of 31 years from 1970 to 2000. The empirical results show that Asian countries have attempted to move towards the frontier technology and that European countries have taken the lead in the world frontier technology.     

FINANCIAL DEVELOPMENT AND THE SOURCES OF GROWTH AND CONVERGENCE*

We extend the deterministic, nonparametric production frontier framework by incorporating financial development. Our analysis convincingly shows that (1) failure to account for financial development overstates the role of physical capital accumulation in labor productivity growth, (2) most of this overstated contribution stems from the efficiency‐enhancing role of well‐functioning financial institutions, (3) international polarization is solely driven by efficiency changes, and (4) increased distributional dispersion of productivity is primarily driven by technological change. Model’s extensions to account for the growth effect of changes in the institutional environment only add to the argument about the overstated role of physical capital.     

The Cosine-Shaped Pattern of Innovations and Technological Advantages： Theory and Evidence

Using data from 24 OECD countries, we find that the relationship between a country＇s R＆D investment and technological advantage in a sector （measured by the country＇s labor productivity of the sector relative to the rest of the world） is non-monotonic. In particular, for countries whose technology levels are much lower or higher than the rest of the world in a sector, their sectoral R＆D investment declines as their advantages in the sector improve; for counties with middle technology levels, the opposite is true. Extending the Eaton and Kortum framework, we develop a static model to theoretically analyze the relationship between R＆D investment and technological advantages. We show that when the research efficiency in a sector is sufficiently elastic with respect to the sectoral technological advantage, a country＇s R＆D investment increases with its technological advantage, and vice versa.     

Has Labor Income Become More Volatile? Evidence from International Industry‐Level Data

Changes in labor market institutions and the increasing integration of the world economy may affect the volatility of capital and labor incomes. This article documents and analyzes changes in income volatility using data for 11 industrialized countries, 22 industries and 35 years (1970–2004). The article has four main findings. First, the unconditional volatility of labor income has declined in parallel to the decline in macroeconomic volatility. Second, the industry‐specific, idiosyncratic component of labor income volatility has hardly changed. Third, cross‐sectional heterogeneity is substantial. If anything, the labor incomes of high‐ and low‐skilled workers have become more volatile relative to the volatility of capital incomes. Fourth, the volatility of labor income relative to the volatility of capital income declines in the labor share. Trade openness has no clear‐cut impact.     

FACTOR ACCUMULATION OR TFP? A REASSESSMENT OF GROWTH IN SOUTHEAST ASIA

Abstract.  This paper reassesses economic growth in five South-East Asian countries utilizing a non-parametric productivity index and parametric techniques to trace the ultimate source/s of growth. Our results show that there is no single explanation for the growth performance of the countries in our sample. The results, particularly with reference to the role of embodied technology are comforting in terms of policy implications for countries such as Singapore, where, given the capital output ratios, there are lower returns to future capital accumulation. The possibility of capital being embodied through technological change makes future prospects much brighter for such a country.     

Are Asian technology gaps due to human capital quality differences?

This paper adopts the meta-frontier framework using DEAP software to analyse the technological gap and level of catch-up of the three regions in Asia (namely, Southern Asia, Eastern Asia and ASEAN5) with respect to the Asian technology as a whole for the period 1980–2006. Countries in Eastern Asia displayed a technology gap ratio of 1.000 which posits that this region defines the best practice frontier for Asia. Meanwhile, countries in Southern Asia region displayed an improvement in technical efficiency and productivity relative to the Asian frontier but lagged in terms of technological advancement. All three regions recorded a lag in technological advancement with respect to the best practice frontier. In order to progress technologically, these countries should be equipped with the necessary infrastructure and human capital to encourage foreign investment and growth. The countries in Eastern Asia and ASEAN5 recorded the strongest productivity growth performance as a group when compared to the countries in Southern Asia. In Southern Asia and ASEAN5 region, the technology gap ratio is below 1.000 subsequent to the 1997/98 financial crisis. On the contrary, East Asia kept up with the benchmark frontier during most of the sample period inclusive of the period after the financial crisis.