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

25 Pages Posted: 26 Feb 2016

See all articles by Areendam Chanda

Areendam Chanda

Louisiana State University, Baton Rouge - Department of Economics

Bibhudutta Panda

University of Minnesota - Morris - Division of Social Sciences

Date Written: April 2016

Abstract

In this study, we examine the importance of multifactor productivity (MFP) growth in goods and services for U.S. States during 1980–2007 by applying the dual growth accounting framework. We find that MFP growth was relatively high and converged in the goods sector, but was low and did not converge in services. Although low growth in MFP in services was due to declining real user cost, particularly in real estate services, the lack of convergence 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.

JEL Classification: O47, R11

Suggested Citation

Chanda, Areendam and Panda, Bibhudutta, Productivity Growth in Goods and Services Across the Heterogeneous States of America (April 2016). Economic Inquiry, Vol. 54, Issue 2, pp. 1021-1045, 2016, Available at SSRN: https://ssrn.com/abstract=2738261 or http://dx.doi.org/10.1111/ecin.12256

Areendam Chanda (Contact Author)

Louisiana State University, Baton Rouge - Department of Economics ( email )

Department of economics
Baton Rouge, LA 70803-6308
United States
225-578-3791 (Phone)

Bibhudutta Panda

University of Minnesota - Morris - Division of Social Sciences ( email )

600 E 4th St
Morris, MN 56267
United States

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