How to Measure the Unobservable: A Panel Technique for the Analysis of TFP Convergence

Posted: 24 Jun 2008

See all articles by Adriana Di Liberto

Adriana Di Liberto

Università di Cagliari and Crenos; IZA Institute of Labor Economics

Francesco Pigliaru

University of Cagliari and CRENoS

Roberto Mura

University of Manchester - Manchester Business School

Multiple version iconThere are 2 versions of this paper

Date Written: April 2008

Abstract

This paper proposes a fixed-effect panel methodology that enables us to simultaneously take into account both TFP convergence and the traditional neoclassical-type of convergence. We analyse a sample of Italian regions between 1963 and 1993 and find strong evidence that both mechanisms were at work during the process of aggregate regional convergence observed in Italy up to the mid-seventies. Finally, we find that our TFP estimates are highly positively correlated with standard human capital measures, where the latter is not statistically significant in growth regressions. This evidence confirms one of the hypotheses of the Nelson and Phelps approach, namely that human capital is the main determinant of technological catch-up. Our results are robust to the use of different estimation procedures such as simple LSDV, Kiviet-corrected LSDV, and GMM à la Arellano and Bond.

JEL Classification: O47, O33, O18, C23

Suggested Citation

Di Liberto, Adriana and Pigliaru, Francesco and Mura, Roberto, How to Measure the Unobservable: A Panel Technique for the Analysis of TFP Convergence (April 2008). Oxford Economic Papers, Vol. 60, Issue 2, pp. 343-368, 2008. Available at SSRN: https://ssrn.com/abstract=1150602 or http://dx.doi.org/gpm022

Adriana Di Liberto

Università di Cagliari and Crenos ( email )

via S. Ignazio 78
Cagliari, 09123
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Francesco Pigliaru

University of Cagliari and CRENoS ( email )

Viale S. Ignazio, 78
Cagliari I-09123
Italy
070-6753818 (Phone)
070-6753760 (Fax)

HOME PAGE: http://francescopigliaru@blogspot.com

Roberto Mura

University of Manchester - Manchester Business School ( email )

Crawford House
Oxford Road
Manchester, Lancashire M13 9PL
United Kingdom
+44 (0) 161 275 4023 (Fax)

HOME PAGE: http://www.robertomura.com

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