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Generalized Solow-Neutral Technical Progress and Postwar Economic Growth

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  • Michael J. Boskin
  • Lawrence J. Lau
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    Abstract

    Using revised, updated, and consistent annual post-World War II data from the G-7 countries developed by us, we econometrically estimate and test alternative explanations of the structure of economic growth in a model with three inputs tangible capital, labor, and human capital which permits the identification of the magnitudes of and biases in both returns to scale and technical progress. We find: 1. Technical progress is simultaneously purely tangible capital and human capital augmenting, that is, generalized Solow-neutral.' This finding provides an alternative explanation of the slow pace of convergence in real GDP per capita: the benefits from technical progress depend directly on the levels of tangible and human capital; countries with higher levels of capital realize higher rates of technical progress.2. Technical progress has been capital, not labor, saving and thus is not a cause of systemic structural unemployment. 3. Technical progress accounts for more than 50 percent of the economic growth of the G-7 countries except Canada. Tangible capital input is next most important; together with technical progress, they account for three quarters or more of the growth of real output in the G-7 countries, except Canada. 4. The most important source of the growth slowdown since the mid-1970's decline in the rate of capital (both tangible and human)-augmenting technical progress.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8023.

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    Date of creation: Dec 2000
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    Handle: RePEc:nbr:nberwo:8023

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    Cited by:
    1. Hunt, Jennifer & Garant, Jean-Philippe & Herman, Hannah & Munroe, David J., 2012. "Why Don't Women Patent?," IZA Discussion Papers 6886, Institute for the Study of Labor (IZA).
    2. Hunt, Jennifer & Garant, Jean-Philippe & Herman, Hannah & Munroe, David J., 2013. "Why are women underrepresented amongst patentees?," Research Policy, Elsevier, Elsevier, vol. 42(4), pages 831-843.
    3. Brad Sturgill, 2009. "Cross-country Variation in Factor Shares and its Implications for Development Accounting," Working Papers, Department of Economics, Appalachian State University 09-07, Department of Economics, Appalachian State University.
    4. Jungsoo Park & Hang Ryu, 2006. "Accumulation, Technical Progress, and Increasing Returns in the Economic Growth of East Asia," Journal of Productivity Analysis, Springer, Springer, vol. 25(3), pages 243-255, 06.
    5. Paulo S.A. Sousa & Pedro Cosme C. Vieira, 2011. "Universities and authors: a ranking for international finance," Economics Bulletin, AccessEcon, vol. 31(1), pages 507-518.
    6. Gundlach, Erich, 2003. "Makroökonomisches Produktivitätswachstum in der neuen Ökonomie: empirischer Anspruch und methodische Unzulänglichkeiten," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 3698, Kiel Institute for the World Economy (IfW).
    7. Erich Gundlach, 2001. "Interpreting Productivity Growth in the New Economy: Some Agnostic Notes," Kiel Working Papers 1020, Kiel Institute for the World Economy.
    8. Arcand Jean-Louis & Béatrice d'Hombres, 2005. "Explaining the Negative Coefficient Associated with Human Capital in Augmented Solow Growth Regressions," Macroeconomics, EconWPA 0510010, EconWPA.
    9. Eliot A. Jamison & Dean T. Jamison & Eric A. Hanushek, 2006. "The Effects of Education Quality on Income Growth and Mortality Decline," NBER Working Papers 12652, National Bureau of Economic Research, Inc.

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