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Second thoughts on development accounting

Author

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  • Gundlach, Erich
  • Rudman, Desmond
  • Wößmann, Ludger

Abstract

We estimate the relative roles of factor inputs and productivity in explaining the level of economic development, which is measured as output per worker. For a large sample of countries, we show that alternative identifying productivity assumptions and alternative measures of human capital have a large impact on the relative weights of factor inputs and productivity in a decomposition of output per worker. For a sample of OECD countries, we find that productivity has almost no role in explaining cross-country differences in output per worker. This result supports the reasoning of a traditional neoclassical growth model.

Suggested Citation

  • Gundlach, Erich & Rudman, Desmond & Wößmann, Ludger, 1998. "Second thoughts on development accounting," Kiel Working Papers 895, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:895
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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.
    4. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-698, June.
    5. Nelson, Richard R, 1973. "Recent Exercises in Growth Accounting: New Understanding or Dead End?," American Economic Review, American Economic Association, vol. 63(3), pages 462-468, June.
    6. Eric A. Hanushek & Dongwook Kim, 1995. "Schooling, Labor Force Quality, and Economic Growth," NBER Working Papers 5399, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(3), pages 237-270, September.
    2. Gundlach, Erich & Wößmann, Ludger, . "Bildungsressourcen, Bildungsinstitutionen und Bildungsqualität: Makroökonomische Relevanz und mikroökonomische Evidenz," Chapters in Economics, University of Munich, Department of Economics.
    3. repec:aea:aejmac:v:9:y:2017:i:4:p:184-224 is not listed on IDEAS
    4. Eric A. Hanushek & Jens Ruhose & Ludger Wößmann, 2015. "Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States," CESifo Working Paper Series 5411, CESifo Group Munich.
    5. Audrey Siew Kim LIM & Kam Ki TANG, 2008. "Human Capital Inequality And The Kuznets Curve," The Developing Economies, Institute of Developing Economies, vol. 46(1), pages 26-51.
    6. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 607-668, September.
    7. Audrey Siew Kim Lim & Kam Ki Tang, 2006. "Human inequality, human capital inequality and the Kuznets curve," CAMA Working Papers 2006-08, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    8. Caselli, Francesco, 2014. "The Latin American efficiency gap," LSE Research Online Documents on Economics 60358, London School of Economics and Political Science, LSE Library.
    9. Martin Paldam & Erich Gundlach, 2008. "Two Views on Institutions and Development: The Grand Transition vs the Primacy of Institutions," Kyklos, Wiley Blackwell, vol. 61(1), pages 65-100, February.
    10. Sturgill, Brad, 2014. "Back to the basics: Revisiting the development accounting methodology," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 52-68.
    11. 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.
    12. Marcelo Soto, 2006. "The Causal Effect of Education on Aggregate Income," Working Papers 0605, International Economics Institute, University of Valencia.
    13. Francesco Caselli, 2014. "The Latin American Efficiency Gap," Discussion Papers 1421, Centre for Macroeconomics (CFM).
    14. Adaiah Lilenstein, 2018. "Integrating Indicators of Education Quantity and Quality in Six Francophone African Countries," Working Papers 09/2018, Stellenbosch University, Department of Economics.
    15. Hanushek, Eric A. & Woessmann, Ludger, 2012. "Schooling, educational achievement, and the Latin American growth puzzle," Journal of Development Economics, Elsevier, vol. 99(2), pages 497-512.
    16. Kai Carstensen & Erich Gundlach & Susanne Hartmann, 2009. "The Augmented Solow Model with Mincerian Schooling and Externalities," German Economic Review, Verein für Socialpolitik, vol. 10, pages 448-463, November.
    17. Gundlach, Erich, 2003. "Die Bedeutung des Humankapitals für das Wirtschaftswachstum," Open Access Publications from Kiel Institute for the World Economy 3029, Kiel Institute for the World Economy (IfW).
    18. Vincenzo Scoppa, 2007. "Quality of Human and Physical Capital and Technological Gaps across Italian Regions," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 585-599.
    19. K.K.Tang & Lim, A. S. K, "undated". "Education Inequality, Human Capital Inequality and the Kuznets Curve," MRG Discussion Paper Series 0506, School of Economics, University of Queensland, Australia.
    20. Caselli, Francesco, 2014. "The Latin American efficiency gap," LSE Research Online Documents on Economics 86336, London School of Economics and Political Science, LSE Library.
    21. Siebert, Horst, 1999. "How can Europe solve its unemployment problem?," Kiel Discussion Papers 342, Kiel Institute for the World Economy (IfW).
    22. Gundlach, Erich, 1999. "Die Produktivität der Bildung," Open Access Publications from Kiel Institute for the World Economy 2320, Kiel Institute for the World Economy (IfW).
    23. Gundlach, Erich, 1999. "Investment in education: Some lessons from the international evidence for the Baltic states," Kiel Discussion Papers 333, Kiel Institute for the World Economy (IfW).
    24. Francesco Caselli, 2014. "The Latin American Efficiency Gap," CEP Discussion Papers dp1289, Centre for Economic Performance, LSE.

    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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