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Intra- and Inter-Sectoral Knowledge Spillovers and TFP Growth Rates

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Quella, Núria

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Abstract

In this paper I estimate unobserved labor-generated knowledge spillovers within and between six large macroeconomic sectors covering the US civilian economy from 1948 to 1991 and relate them to observed productivity changes. I construct a series of sectoral knowledge spillover matrices that show the changes in the magnitude and direction of intraand inter-sectoral spillovers for each sector. I show that the productivity slowdown in the US economy of the early seventies is associated with a decline of intra-sectoral spillovers and the emergence of inter-sectoral spillovers. This change coincides with trade taking over manufacturing as the main source and destination of new knowledge flows. The analysis of technology flows, measured as the production and use of patents, corroborates this finding. Furthermore, I also compute the gap between the market, which ignores knowledge spillovers, and the optimal allocation of labor across sectors, and the wedge between market and optimal wage rates by sector. I show that optimal employment in manufactures is 32% higher than the market allocation, and that optimal wages in the overall economy are 31% above market wages.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2853.

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Date of creation: Apr 2007
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Handle: RePEc:pra:mprapa:2853

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Related research
Keywords: Knowledge spillovers technology productivity slowdown.

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Find related papers by JEL classification:
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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