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The Solow–Pasinetti debate on productivity measurement: Review and reformulation

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  • Garbellini, Nadia
  • Wirkierman, Ariel Luis

Abstract

It is beyond doubt that Solow’s proposal for “an elementary way of segregating variations in output per head due to technical change from those due to the availability of capital per head” (Solow, 1957, p. 312) leading to the ‘residual’, and hence, TFP growth, has been a crucial development of Neoclassical economics. This notwithstanding, the critique of (and alternative to) Solow’s proposal advanced by Pasinetti (1959) has not been equally acknowledged. The debate re-emerged when a posthumous note by Richard Stone (1998[1960]) triggered a further exchange between the authors. This paper aims at retracing the key conceptual aspects of the discussion, pointing to some limitations of Pasinetti’s original implementation of his measure of productivity changes, and providing an Input–Output generalisation based on Pasinetti’s notion of hyper-integrated labour. Seen in this light, Pasinetti’s computable measure of technical change provides a theoretically sound alternative to perform productivity analyses from a Classical perspective.

Suggested Citation

  • Garbellini, Nadia & Wirkierman, Ariel Luis, 2023. "The Solow–Pasinetti debate on productivity measurement: Review and reformulation," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 438-447.
    • Handle: RePEc:eee:streco:v:65:y:2023:i:c:p:438-447
    DOI: 10.1016/j.strueco.2023.04.002
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    References listed on IDEAS

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    1. Nadia Garbellini & Ariel Luis Wirkierman, 2014. "Productivity Accounting in Vertically (Hyper-)integrated Terms: Bridging the Gap between Theory and Empirics," Metroeconomica, Wiley Blackwell, vol. 65(1), pages 154-190, February.
    2. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
    3. Pasinetti,Luigi, 1993. "Structural Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521432825, October.
    4. Pasinetti, Luigi L, 1989. "Growing Subsystems and Vertically Hyper-Integrated Sectors: A Note of Clarification," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(3), pages 479-480, September.
    5. Pasinetti, Luigi L, 1988. "Growing Subsystems, Vertically Hyper-integrated Sectors and the Labour Theory of Value," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 12(1), pages 125-134, March.
    6. Douglas C. Hague, 1961. "Summary Record Of The Debate," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, pages 289-403, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Labour productivity; Vertically (hyper-)integrated sectors; Total factor productivity; Input-Output analysis;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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