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Convergence Across Italian Regions and the Role of Technological Catch-Up

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  • Maffezzoli Marco

    ()
    (Università Bocconi and IGIER)

Abstract

This paper suggests that the main (and possibly unique) source of beta- and sigma-convergence in GDP per worker (i.e. labor productivity) across Italian regions over the 1980-2004 period is the change in technical and allocative efficiency, i.e. convergence in relative TFP levels. To obtain this result, I construct an approximation of the production frontier at different points in time using Data Envelope Analysis (DEA), and measure efficiency as the output-based distance from the frontier. This method is entirely data-driven, and does not require the specification of any particular functional form for technology. Changes in GDP per worker can be decomposed into changes in relative efficiency, changes due to overall technological progress, and changes due to capital deepening. My results suggest that: (i) differences in relative TFP are quantitatively important; (ii) while technological progress and capital deepening are the main, and equally important, forces behind the rightward shift in the distribution of GDP per worker, convergence in relative TFP is the main determinant of the change in its shape.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 6 (2006)
Issue (Month): 1 (August)
Pages: 1-43

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Handle: RePEc:bpj:bejmac:v:topics.6:y:2006:i:1:n:15

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  1. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, April.
  2. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741 Elsevier.
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  4. A. Di Liberto & F. Pigliaru & R. Mura, 2004. "How to measure the unobservable: a panel technique for the analysis of TFP convergence," Working Paper CRENoS 200405, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  5. Guido Ascari & Valeria Di Cosmo, 2005. "Determinants of Total Factor Productivity in the Italian Regions," Macroeconomics 0511009, EconWPA.
  6. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  7. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October.
  8. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  9. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
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