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Human Capital and Macroeconomic Convergence: A Production-Frontier Approach

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  • Henderson, Daniel
  • Russell, Robert

Abstract

We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), (3) human capital accumulation (changes in the efficiency of labor), and (4) capital accumulation (movement along the frontier). The world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections. We find that technological change is decidedly non-neutral. We also analyze the evolution of the cross-country distribution of labor productivity in terms of the quadripartite decomposition, finding that (1) productivity growth and the increased dispersion of the distribution is driven primarily, and roughly equally, by physical and human capital accumulation and (2) international bipolarization (the shift from a unimodal to a bimodal distribution) is brought about primarily by efficiency changes.

Suggested Citation

  • Henderson, Daniel & Russell, Robert, 2001. "Human Capital and Macroeconomic Convergence: A Production-Frontier Approach," Efficiency Series Papers 2001/07, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    • Handle: RePEc:oeg:wpaper:2001/07
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    References listed on IDEAS

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    Cited by:

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    2. Almas Heshmati & Masoomeh Rashidghalam, 2020. "Estimation of technical change and TFP growth based on observable technology shifters," Journal of Productivity Analysis, Springer, vol. 53(1), pages 21-36, February.
    3. Maria Jesus Delgado Rodriguez & Inmaculada Alvarez Ayuso, 2004. "Integration brings convergence? The role of public and human capital," ERSA conference papers ersa04p164, European Regional Science Association.
    4. Shawna Grosskopf, 2003. "Some Remarks on Productivity and its Decompositions," Journal of Productivity Analysis, Springer, vol. 20(3), pages 459-474, November.
    5. Yasmina Reem Limam & Stephen M. Miller, 2004. "Explaining Economic Growth: Factor Accumulation, Total Factor Productivity Growth, and Production Efficiency Improvement," Working papers 2004-20, University of Connecticut, Department of Economics.
    6. Hao, Rui, 2007. "Efficience technique, croissance économique et égalité régionale en Chine : une approche de frontières stochastiques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(3), pages 297-320, septembre.

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