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Generalized Solow-Neutral Technical Progress and Postwar Economic Growth

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  • Michael J. Boskin
  • Lawrence J. Lau

Abstract

Using revised, updated, and consistent annual post-World War II data from the G-7 countries developed by us, we econometrically estimate and test alternative explanations of the structure of economic growth in a model with three inputs tangible capital, labor, and human capital which permits the identification of the magnitudes of and biases in both returns to scale and technical progress. We find: 1. Technical progress is simultaneously purely tangible capital and human capital augmenting, that is, generalized Solow-neutral.' This finding provides an alternative explanation of the slow pace of convergence in real GDP per capita: the benefits from technical progress depend directly on the levels of tangible and human capital; countries with higher levels of capital realize higher rates of technical progress.2. Technical progress has been capital, not labor, saving and thus is not a cause of systemic structural unemployment. 3. Technical progress accounts for more than 50 percent of the economic growth of the G-7 countries except Canada. Tangible capital input is next most important; together with technical progress, they account for three quarters or more of the growth of real output in the G-7 countries, except Canada. 4. The most important source of the growth slowdown since the mid-1970's decline in the rate of capital (both tangible and human)-augmenting technical progress.

Suggested Citation

  • Michael J. Boskin & Lawrence J. Lau, 2000. "Generalized Solow-Neutral Technical Progress and Postwar Economic Growth," NBER Working Papers 8023, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8023
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    3. Gundlach, Erich, 2001. "Interpreting productivity growth in the new economy: Some agnostic notes," Kiel Working Papers 1020, Kiel Institute for the World Economy (IfW Kiel).
    4. Hunt, Jennifer & Garant, Jean-Philippe & Herman, Hannah & Munroe, David J., 2012. "Why Don't Women Patent?," IZA Discussion Papers 6886, Institute of Labor Economics (IZA).
    5. Nicolaus Tideman & Ebere Akobundu & Andrew Johns & Prapaiporn Wutthicharoen, 2002. "The Avoidable Excess Burden of Broad-Based U.S. Taxes," Public Finance Review, , vol. 30(5), pages 416-441, September.
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    8. Michael J. Boskin, 2020. "Are Large Deficits and Debt Dangerous?," NBER Working Papers 26727, National Bureau of Economic Research, Inc.
    9. Jamison, Eliot A. & Jamison, Dean T. & Hanushek, Eric A., 2007. "The effects of education quality on income growth and mortality decline," Economics of Education Review, Elsevier, vol. 26(6), pages 771-788, December.
    10. Gubler, Matthias & Sax, Christoph, 2012. "Skill-Biased Technological Change and the Real Exchange Rate," Working papers 2012/08, Faculty of Business and Economics - University of Basel.
    11. Jamison, Dean T. & Murphy, Shane M. & Sandbu, Martin E., 2016. "Why has under-5 mortality decreased at such different rates in different countries?," Journal of Health Economics, Elsevier, vol. 48(C), pages 16-25.
    12. Jeffrey G. Woods, 2017. "The Effect of Technological Change on the Task Structure of Jobs and the Capital-Labor Trade-Off in US Production," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(2), pages 739-757, June.
    13. Pedro R. D. Bom & Ben J. Heijdra & Jenny Ligthart, 2010. "Output Dynamics, Technology, and Public Investment," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1024, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    14. Erich Gundlach, 2005. "Solow vs. Solow: Notes on Identification and Interpretation in the Empirics of Growth and Development," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(3), pages 541-556, October.
    15. Michael J. Boskin, 2009. "Perspectives on the New Architecture for the US National Accounts," American Economic Review, American Economic Association, vol. 99(2), pages 69-73, May.
    16. Paola Azar Dufrechou, 2018. "Higher education and economic development: can public funding restrain the returns from tertiary education?," Working Papers wpdea1802, Department of Applied Economics at Universitat Autonoma of Barcelona.
    17. Brad Sturgill, 2009. "Cross-country Variation in Factor Shares and its Implications for Development Accounting," Working Papers 09-07, Department of Economics, Appalachian State University.
    18. Hunt, Jennifer & Garant, Jean-Philippe & Herman, Hannah & Munroe, David J., 2013. "Why are women underrepresented amongst patentees?," Research Policy, Elsevier, vol. 42(4), pages 831-843.
    19. Irwin Feller, 2013. "Performance measures as forms of evidence for science and technology policy decisions," The Journal of Technology Transfer, Springer, vol. 38(5), pages 565-576, October.
    20. Kieran McQuinn, 2005. "Dynamic Factor Demands in a Changing Economy - An Irish Application," The Economic and Social Review, Economic and Social Studies, vol. 36(2), pages 109-126.
    21. Gundlach, Erich, 2003. "Makroökonomisches Produktivitätswachstum in der neuen Ökonomie: empirischer Anspruch und methodische Unzulänglichkeiten," Open Access Publications from Kiel Institute for the World Economy 3698, Kiel Institute for the World Economy (IfW Kiel).
    22. Shawna Grosskopf & Sharmistha Self, 2006. "Factor Accumulation Or Tfp? A Reassessment Of Growth In Southeast Asia," Pacific Economic Review, Wiley Blackwell, vol. 11(1), pages 39-58, February.
    23. Mc Quinn, Kieran, 2003. "Dynamic Factor Demands in a Changing Economy: An Irish Application," Research Technical Papers 3/RT/03, Central Bank of Ireland.

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    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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