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Knowledge Spillovers and TFP Growth Rates

  • Nuria Quella

    ()

    (Dept. of Economics, Stony Brook University)

In this paper I calibrate unobserved labor-generated knowledge spillovers within and between six large macroeconomic sectors covering the U.S. civilian economy from 1948 to 1991. Using quality-adjusted data I show that manufacturing and trade & transportation are the main source of knowledge flows to the overall economy for the entire period. However, the productivity slowdown of the early seventies coincides with trade & transportation taking over manufacturing as the main source and destination of post-73 knowledge flows. Furthermore, I compute the gap between the market and the optimal allocation of labor across sectors, and the wedge between market and optimal wages by sector. I find that, for the whole period, optimal employment in manufacturing and trade & transportation is, respectively, 20% and 27% above market. As a result optimal output in these sectors is 12% and 16% higher than the market’s, and optimal wages in manufacturing are 54% above market wages.

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File URL: http://www.sunysb.edu/economics/research/papers/2009/nuriaquella09.pdf
File Function: First version, 2009
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Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 09-03.

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Date of creation: Oct 2009
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Handle: RePEc:nys:sunysb:09-03
Contact details of provider: Postal: Stony Brook, NY 11794-4384
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  1. Jovanovic, Boyan & Nyarko, Yaw, 1994. "The Transfer of Human Capital," Working Papers 94-25, C.V. Starr Center for Applied Economics, New York University.
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  4. Peter Thompson, 2006. "Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-added Citations," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 383-388, May.
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  9. Fuglie, Keith O. & MacDonald, James C. & Ball, V. Eldon, 2007. "Productivity Growth in U.S. Agriculture," Economic Brief 6382, United States Department of Agriculture, Economic Research Service.
  10. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Market Structure and Cyclical Fluctuations in U.S. Manufacturing," NBER Working Papers 2115, National Bureau of Economic Research, Inc.
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  13. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
  14. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  15. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-72, June.
  16. Jeffrey I. Bernstein, 1988. "Costs of Production, Intra- and Interindustry R&D Spillovers: Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 324-47, May.
  17. Henry Nieuwenhuijsen & André van Stel, 2002. "Knowledge Spillovers and Economic Growth; an analysis using data of Dutch regions in the period 1987-1995," Scales Research Reports N200203, EIM Business and Policy Research.
  18. Lawrence Slifman & Carol Corrado, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May.
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