IDEAS home Printed from https://ideas.repec.org/p/red/sed010/839.html
   My bibliography  Save this paper

How Important are Human Capital, Physical Capital and Total Factor Productivity for Determining State Economic Growth in the United States, 1840-2000

Author

Listed:
  • Todd Schoellman

    (Clemson University)

  • Sean Mulholland

    (Stonehill College)

  • Robert Tamura

    (Clemson University)

  • Chad Turner

    (Nicholls State University)

Abstract

This paper introduces a new data set of state-level physical capital in the United States from 1840 to 2000. The new data is combined with measures of the labor force, human capital, land, and output by state to perform traditional accounting decom- positions. Growth in measured inputs accounts for three-fourths of output growth, but variation in the level or growth of measured inputs accounts for only one-third of the variation in the level or growth of output. Our methodology is comparable to that used for cross-country accounting studies, and yields a quantitatively similar conclusion: most cross-state and cross-country variation in levels or growth rates is driven by variation in TFP. One interpretation is that while states have less institu- tional and technological heterogeneity (and consequently less TFP variation), this is matched equally by less input heterogeneity, with the relative importance of TFP and inputs remaining constant throughout the process of output per worker convergence. In this case, the relative importance of inputs and TFP may constitute a robust fact that applies across a variety of settings.

Suggested Citation

  • Todd Schoellman & Sean Mulholland & Robert Tamura & Chad Turner, 2010. "How Important are Human Capital, Physical Capital and Total Factor Productivity for Determining State Economic Growth in the United States, 1840-2000," 2010 Meeting Papers 839, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:839
    as

    Download full text from publisher

    File URL: https://economicdynamics.org/meetpapers/2010/paper_839.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Daniel Berkowitz, 2005. "American Civil Law Origins: Implications for State Constitutions," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 62-84.
    3. 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.
    4. Tamura, Robert, 1992. "Efficient equilibrium convergence: Heterogeneity and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 355-376, December.
    5. John W. Kendrick, 1956. "Productivity Trends: Capital and Labor," NBER Books, National Bureau of Economic Research, Inc, number kend56-1.
    6. Collins, William J. & Williamson, Jeffrey G., 2001. "Capital-Goods Prices And Investment, 1870–1950," The Journal of Economic History, Cambridge University Press, vol. 61(1), pages 59-94, March.
    7. Jorgenson, Dale W, 1988. "Productivity and Postwar U.S. Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 23-41, Fall.
    8. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    9. Jones Charles I., 2001. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(2), pages 1-45, August.
    10. Alvin S. Tostlebe, 1954. "Introduction to "The Growth of Physical Capital in Agriculture, 1870-1950"," NBER Chapters, in: The Growth of Physical Capital in Agriculture, 1870-1950, pages 1-15, National Bureau of Economic Research, Inc.
    11. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    12. Alvin S. Tostlebe, 1954. "The Growth of Physical Capital in Agriculture, 1870-1950," NBER Books, National Bureau of Economic Research, Inc, number tost54-1.
    13. Kompas, Tom & Che, Tuong Nhu, 2004. "Productivity in the Australian Dairy Industry," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 12.
    14. Scott L. Baier & Gerald P. Dwyer & Robert Tamura, 2006. "How Important are Capital and Total Factor Productivity for Economic Growth?," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 23-49, January.
    15. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
    16. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1.
    17. Daniel Creamer & Sergei Dobrovolsky & Israel Borenstein, 1960. "Capital in Manufacturing and Mining: Its Formation and Financing," NBER Books, National Bureau of Economic Research, Inc, number crea60-1.
    18. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    19. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    20. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
    21. Simon Kuznets & Elizabeth Jenks, 1961. "Capital in the American Economy: Its Formation and Financing," NBER Books, National Bureau of Economic Research, Inc, number kuzn61-1.
    22. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    23. Daniel Berkowitz & Karen Clay, 2006. "The Effect of Judicial Independence on Courts: Evidence from the American States," The Journal of Legal Studies, University of Chicago Press, vol. 35(2), pages 399-440, June.
    24. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114, Central Bank of Chile.
    25. Zvi Griliches, 1960. "Measuring Inputs in Agriculture: A Critical Survey," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(5), pages 1411-1427.
    26. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-551, August.
    27. Hoyt Bleakley, 2010. "Malaria Eradication in the Americas: A Retrospective Analysis of Childhood Exposure," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 1-45, April.
    28. Kevin J. Stiroh & Dale W. Jorgenson, 2000. "U.S. Economic Growth at the Industry Level," American Economic Review, American Economic Association, vol. 90(2), pages 161-167, May.
    29. Solomon Fabricant, 1954. "Economic Progress and Economic Change," NBER Books, National Bureau of Economic Research, Inc, number annu54-1.
    30. Dougherty, Chrys & Jorgenson, Dale W, 1996. "International Comparisons of the Sources of Economic Growth," American Economic Review, American Economic Association, vol. 86(2), pages 25-29, May.
    31. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    32. Tamura, Robert & Dwyer, Jerry & Devereux, John & Baier, Scott, 2019. "Economic growth in the long run," Journal of Development Economics, Elsevier, vol. 137(C), pages 1-35.
    33. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    34. John Kendrick, 1956. "Productivity Trends: Capital and Labor," NBER Chapters, in: Productivity Trends: Capital and Labor, pages -3-23, National Bureau of Economic Research, Inc.
    35. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    36. Theodore W. Schultz, 1960. "Capital Formation by Education," Journal of Political Economy, University of Chicago Press, vol. 68, pages 571-571.
    37. Ferreira Pedro C. & Pessoa Samuel A & Veloso Fernando A, 2008. "The Evolution of International Output Differences (1970-2000): From Factors to Productivity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-34, February.
    38. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sector Level," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 820-835, October.
    39. Gasper A. Garofalo & Steven Yamarik, 2002. "Regional Convergence: Evidence From A New State-By-State Capital Stock Series," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 316-323, May.
    40. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity and Convergence across U.S. States and Industries," Empirical Economics, Springer, vol. 21(1), pages 113-135.
    41. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
    42. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
    43. Mitchener, Kris James & McLean, Ian W, 2003. "The Productivity of US States since 1880," Journal of Economic Growth, Springer, vol. 8(1), pages 73-114, March.
    44. Todd Schoellman, 2010. "The Occupations and Human Capital of U.S. Immigrants," Journal of Human Capital, University of Chicago Press, vol. 4(1), pages 1-34.
    45. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December.
    46. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
    47. Dale W. Jorgenson & Frank M. Gollop, 1992. "Productivity Growth in U.S. Agriculture: A Postwar Perspective," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 745-750.
    48. Canaday, Neil & Tamura, Robert, 2009. "White discrimination in provision of black education: Plantations and towns," Journal of Economic Dynamics and Control, Elsevier, vol. 33(7), pages 1490-1530, July.
    49. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1.
    50. Robert E. Gallman, 1986. "The United States Capital Stock in the Nineteenth Century," NBER Chapters, in: Long-Term Factors in American Economic Growth, pages 165-214, National Bureau of Economic Research, Inc.
    51. Chad Turner & Robert Tamura & Sean Mulholland & Scott Baier, 2007. "Education and income of the states of the United States: 1840–2000," Journal of Economic Growth, Springer, vol. 12(2), pages 101-158, June.
    52. Turner, Chad & Tamura, Robert & Schoellman, Todd & Mulholland, Sean, 2011. "Estimating Physical Capital and Land for States and Sectors of the United States, 1850-2000," MPRA Paper 32847, University Library of Munich, Germany.
    53. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    54. Francesco Caselli & Wilbur John Coleman II, 2001. "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 584-616, June.
    55. Mitchener, Kris James & McLean, Ian W., 1999. "U.S.Regional Growth And Convergence, 1880–1980," The Journal of Economic History, Cambridge University Press, vol. 59(4), pages 1016-1042, December.
    56. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Chapters, in: Resource and Output Trends in the United States since 1870, pages 1-23, National Bureau of Economic Research, Inc.
    57. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
    58. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    59. Stanley L. Engerman & Robert E. Gallman, 1986. "Long-Term Factors in American Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number enge86-1.
    60. Jorgenson, Dale W., 2005. "Accounting for Growth in the Information Age," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 10, pages 743-815, Elsevier.
    61. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
    62. Peter J. Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114, National Bureau of Economic Research, Inc.
    63. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
    64. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
    65. Dani Rodrik, 2013. "Unconditional Convergence in Manufacturing," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 165-204.
    66. Hoyt Bleakley, 2007. "Disease and Development: Evidence from Hookworm Eradication in the American South," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 73-117.
    67. repec:fth:harver:1487 is not listed on IDEAS
    68. Higgs, Robert, 2004. "Wartime Socialization of Investment: A Reassessment of U.S. Capital Formation in the 1940s," The Journal of Economic History, Cambridge University Press, vol. 64(2), pages 500-520, June.
    69. Solomon Fabricant, 1954. "Economic Progress and Economic Change," NBER Chapters, in: Economic Progress and Economic Change, pages 1-97, National Bureau of Economic Research, Inc.
    70. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
    71. Bodenhorn, Howard, 2002. "State Banking in Early America: A New Economic History," OUP Catalogue, Oxford University Press, number 9780195147766.
    72. Robert J. Gordon, 1999. "U.S. Economic Growth since 1870: One Big Wave?," American Economic Review, American Economic Association, vol. 89(2), pages 123-128, May.
    73. Robert Summers & Alan Heston, 1988. "A New Set Of International Comparisons Of Real Product And Price Levels Estimates For 130 Countries, 1950–1985," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 1-25, March.
    74. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tamura, Robert & Dwyer, Jerry & Devereux, John & Baier, Scott, 2019. "Economic growth in the long run," Journal of Development Economics, Elsevier, vol. 137(C), pages 1-35.
    2. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    3. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    4. Massimo Del Gatto & Adriana Di Liberto & Carmelo Petraglia, 2011. "Measuring Productivity," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 952-1008, December.
    5. Thais Andreia Araujo Souza & Marina Silva Cunha, 2018. "Performance of Brazilian total factor productivity from 2004 to 2014: a sectoral and regional analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-18, December.
    6. Antonio Ciccone & Elias Papaioannou, 2009. "Human Capital, the Structure of Production, and Growth," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 66-82, February.
    7. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.),Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114, Central Bank of Chile.
    8. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 184-224, October.
    9. Scott L. Baier & Gerald P. Dwyer & Robert Tamura, 2006. "How Important are Capital and Total Factor Productivity for Economic Growth?," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 23-49, January.
    10. Jonathan Temple & Ludger Wößmann, 2006. "Dualism and cross-country growth regressions," Journal of Economic Growth, Springer, vol. 11(3), pages 187-228, September.
    11. Jie Li & Robert Ayres, 2008. "Economic Growth and Development: Towards a Catchup Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(1), pages 1-36, May.
    12. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2015. "Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States," CESifo Working Paper Series 5411, CESifo.
    13. Malcolm Abbott, 2018. "Productivity: a history of its measurement," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2018(1), pages 57-80.
    14. Hulten, Charles R., 2010. "Growth Accounting," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 987-1031, Elsevier.
    15. Veloso, Fernando A. & Ferreira, Pedro Cavalcanti & Pessôa, Samuel de Abreu, 2004. "The evolution of international output differences (1960-2000): From factors to productivity," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 548, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    16. Turner, Chad & Tamura, Robert & Schoellman, Todd & Mulholland, Sean, 2011. "Estimating Physical Capital and Land for States and Sectors of the United States, 1850-2000," MPRA Paper 32847, University Library of Munich, Germany.
    17. Robert W. Fogel, 2008. "The Impact of the Asian Miracle on the Theory of Economic Growth," NBER Chapters, in: Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, pages 311-354, National Bureau of Economic Research, Inc.
    18. Dale Jorgenson & Eric Yip, 2001. "Whatever Happened to Productivity Growth?," NBER Chapters, in: New Developments in Productivity Analysis, pages 509-540, National Bureau of Economic Research, Inc.
    19. Nazrul Islam, 2003. "What have We Learnt from the Convergence Debate?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 309-362, July.
    20. Zhang, Xiaobei & Wang, Xiaojun, 2021. "Measures of human capital and the mechanics of economic growth," China Economic Review, Elsevier, vol. 68(C).

    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed010:839. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.