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Productivity Growth in Goods and Services Across The Heterogeneous States of America

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Abstract

In this paper, we compare the relative roles of multi-factor productivity (MFP) growth and factor accumulation in goods and services for states in the US from 1980 to 2007 using the dual growth accounting framework. We find that while MFP growth was relatively high, and converged in the goods sector, it was low and diverged in services. Though the low growth in MFP in services was due to declining real user cost, the divergence itself was due to variation in wage growth. We also document that while the gap between productivity and wage growth was higher in goods, the two series were more strongly correlated in services. Finally, states with higher initial human capital experienced higher growth in both sectors.

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  • Areendam Chanda & Bibhudutta Panda, 2014. "Productivity Growth in Goods and Services Across The Heterogeneous States of America," Departmental Working Papers 2014-10, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2014-10
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