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Decomposition of Output Growth in the Presence of Input Quality: A Stochastic Frontier Approach

Listed author(s):
  • Yasmina Rim Limam

    (Faculté des Sciences Économiques et de Gestion de Nabeul and Institutions and Political Economy Group (IPEG), University of the Witwatersrand)

  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

  • Giampaolo Garzarelli

    (Università di Roma and Institutions and Political Economy Group (IPEG), University of the Witwatersrand)

How do physical capital accumulation and Total Factor Productivity (TFP) individually add to economic growth? We approach this question from the perspective of the quality of both labor and physical capital, namely human capital and the age of physical capital. We build a unique dataset by explicitly calculating the age of physical capital for each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five groups of countries (Africa, East Asia, Latin America, South Asia, and West). Quality of capital significantly and positively affects output growth in three groups. The decomposition of output growth demonstrates that factor growth generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth.

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File URL: http://web2.uconn.edu/economics/working/2016-13.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2016-13.

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Length: 42 pages
Date of creation: Sep 2016
Handle: RePEc:uct:uconnp:2016-13
Note: Yasmina Rim Limam is the corresponding author
Contact details of provider: Postal:
University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063

Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/

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