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Factor Adjustment, Quality Change, and Productivity Growth for U.S. Manufacturing

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  • Jeffrey I. Bernstein
  • Theofanis P. Mamuneas
  • Panos Pashardes

Abstract

This paper accounts for quality improvements and adjustment costs in all inputs to U.S. manufacturing production. Adjustment processes for non-capital inputs are slower than previously recognized. Annual adjustment percentages are: labor 77, capital 30, energy 20, and materials 21. Factor prices should be adjusted for quality improvements to reflect higher marginal products. The percentage increases in marginal products from quality improvements are: labor 0.25, capital 0.30, energy 2.13, and materials 0.92. Observed input growth should be adjusted for quality improvements. Unadjusted input growth causes efficiency-based productivity growth rates to exceed observed productivity growth in the slowdown period of 1974 - 1995.

Suggested Citation

  • Jeffrey I. Bernstein & Theofanis P. Mamuneas & Panos Pashardes, 1999. "Factor Adjustment, Quality Change, and Productivity Growth for U.S. Manufacturing," NBER Working Papers 6877, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6877
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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