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Industrial Origins of the US productivity revival 1995-2005. Dale Jorgenson, Mun Ho, Kevin Stiroh, Jon Samuels 2008 World Congress on National Accounts and Economic Performance Measures, Washington DC. May 13, 2008. Topics 3 ways of constructing aggregate GDP from industry accounts - PowerPoint PPT Presentation
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Industrial Origins of the US productivity revival 1995-2005
Dale Jorgenson, Mun Ho,
Kevin Stiroh, Jon Samuels
2008 World Congress on National Accounts and Economic Performance Measures, Washington DC.
May 13, 2008
Topics
-3 ways of constructing aggregate GDP from industry accounts
-the role of IT-producing, IT-using and non-IT industries in U.S. productivity growth 1995-2000 vs. 2000-2005
-the contribution of labor input in the productivity revival
Information Technology and the American Growth ResurgenceJorgenson, Ho and Stiroh (2005)
Industry Origins of the American Productivity Resurgence,Jorgenson, Ho, Samuels and Stiroh (2007), Economic Systems Research
( , , , , )j j j j j jY f K L E M T
Industry gross output production function:
( , , ) ( , )j j j j j j jV V K L T Y f E M
Value added of industry j:
j=1,…85 using the SIC
3 ways of describing aggregate GDP
-aggregate production function GDP = V1 + … + Vn = f(K,L,Tagg)
-aggregate ppf GDP = Vppf(V1, … ,Vn) = f(K,L,Tppf)
-Domar-aggregation over industries GDP = Vppf(V1,V2,…,Vn) = f(K1,…Kn,L1,…Ln,T1,…Tn)
ˆ ˆppf REALL REALLt jt jt t t
j
T d T K L
ln lnVjt jt
t jt jt jtj t
P VGDP w V w
nGDP
Aggregate GDP from Production Possibility Frontier;translog index of industry value added:
IT prod IT using non-IT
ln ln lnjt jt jt jt jt jtj j j
w V w V w V
Focus on 3 industry groups:
IT Producing (3% GDP)Computers & Office EqCommunications Equip.Electronic ComponentsComputer services
IT Using (26%) non-IT (71%)Aerospace FarmsMedical Equipment Oil miningPublishing Motor vehiclesAir transportation TruckingTelephone and telegraph Retail tradeWholesale trade HospitalsNondepository inst; brokers …InsuranceEducation…
Classification of industries
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1960-1995 1995-2000 2000-2005
An
nu
al C
on
trib
uti
on
(%
)
Non-IT Industries IT-Using Industries IT-Producing Industries
Industry Contributions to Value Added GrowthValue added weighted contributions of industry value
added.
Comparing
aggregate production function
GDP = V1 + … + Vn = f(K,L,Tagg)
aggregate ppf
GDP = Vppf(V1, … ,Vn) = f(K,L,Tppf)
Production Possibility Frontier vs Aggregate Production Function
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1960-1995 1995-2000 2000-2005
An
nu
al G
row
th (
%)
Aggreg. Production Function Prod. Possibility Frontier
ˆ ˆppf REALL REALLt jt jt t t
j
T d T K L
Domar aggregation over industries.
Aggregate TFP growth is the sum of industry TFPgrowth and reallocation of capital and labor.
-0.12 -0.07 -0.02 0.03 0.08 0.13
Lumber and woodDrugs
Transportation svcs & PipelinesCoal mining
Agri services, forestryMisc manufacturing
Water transport.Petroleum and coal products
Measuring instrumentsPrimary metals
Printing and reproductionComputer services
Communications EquipmentPersonal services
Medical equipment and opthalmic goodsOther Instruments
Audio and video equipElectric utilities (pvt)
Furniture and fixturesNonmetallic mineral products
Paper and alliedApparel
Trucking and warehousingAir transport.
Other Electrical machineryOffices of health practitioners
Fabricated metal prdChemicals excl drugs
Motor vehiclesRetail trade; motor vehicles
AerospaceRailroad transportation
Rubber and misc plasticsTextile
Depository InstFood
Telephone and telegraphFarms
Retail trade exc motor vehElectronic Components
Real Estate- otherWholesale trade
Computers & Office Eq
Industry Contributions to Productivity Growth, 1960-2005Domar weighted contribution.
-0.12 -0.07 -0.02 0.03 0.08 0.13
ConstructionOil and gas extraction
Business svc exc computerHospitals, private
Insurance carriers, ins agents, servicesGas utilities
Radio and TVLegal services
Misc professional servicesEducational services (private)
Eating and drinkingPublishing
Auto servicesMisc repair
TobaccoNondeposit; Sec-com brokers;InvesNursing and personal care facilities
Health services, necWater and sanitation
Metal miningHotels
Motion picturesPrivate households
Federal gen govt excl healthFederal govt enterprises
Government HospitalsGovt other health
S&L educationS&L excl health,educS&L govt enterprises
MilitaryResearch
Nonmetal miningFishing
Insulated wireSocial svc and membership org
LeatherOther Transportation equipment
Machinery excl computersShips and boats
Recreation servicesLocal passenger transit
Industry Contributions to Productivity Growth 1960-05 (cont.)Domar weighted contribution.
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1960-1995 1995-2000 2000-2005
An
nu
al g
row
th (
%)
non-IT IT-Using IT-Producing
Industry Contributions to Productivity GrowthDomar weighted
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1960-1995 1995-2000 2000-2005
An
nu
al g
row
th (
%)
non-IT IT-Using IT-ProducingReallocation of K Reallocation of L
Sources of Aggregate TFP Growth
Sources of Growth
GDP = Vppf(V1, … ,Vn) = f(K,L,Tppf)
GDP = f(KIT, KnonIT, LCollege, LnonCol,Tppf)
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1960-1995 1995-2000 2000-2005
An
nu
al C
on
trib
uti
on
(%
)
Non-college Labor College Labor Non-IT Capital
IT Capital Aggregate TFP
Sources of U.S. Economic Growth
Table 6.8 Labor Characteristics by Industry, 2005
Compen-sation
Hours wk. Aged 16-35
Hours wk. Females
Females; college ed
Males; college ed
($/hour) (%) (%) (%) (%)IT Producing
16 Computers & Office Eq 39.7 32 30 48 6320 Communications equip 46.3 29 31 39 5721 Electronic Components 41.2 31 34 29 5466 Computer services 51.0 42 29 58 66
IT Using53 Wholesale trade 36.2 31 26 26 2758 Nondepos inst; brokers 80.9 39 47 38 66
nonIT industries9 Construction 26.1 37 8 19 10
73 Hospitals, private 25.1 28 75 38 47
85 Industry Median 35.4 29 32 26 26
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1960-1995 1995-2000 2000-2005
An
nu
al C
on
trib
uti
on
(%
)
non-IT IT using IT producing
Industry Contributions to Growth of College-educated Labor
Figure 6.9: Compensation by age relative to 25-34 year olds
0.9
1.0
1.1
1.2
1.3
1.4
1977 1980 1983 1986 1989 1992 1995 1998
35-44
45-54
55-65
55-64
45-54
35-44
December 23, 2000 issue
Figure 6.9: Compensation by age relative to 25-34 year olds
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1977 1981 1985 1989 1993 1997 2001 2005
35-44
45-54
55-65
45-54
55-64
35-44
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1960-1995 1995-2000 2000-2005
An
nu
al C
on
trib
uti
on
(%
)
non-IT IT using IT producing
Industry Contributions to Growth of IT Capital Input
Next step:
Growth accounting with NAICS