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

40 Pages Posted: 10 May 2004

See all articles by Adriana Di Liberto

Adriana Di Liberto

Università di Cagliari and Crenos; IZA Institute of Labor Economics

Roberto Mura

University of Manchester - Alliance Manchester Business School

Francesco Pigliaru

University of Cagliari and CRENoS

Multiple version iconThere are 2 versions of this paper

Date Written: January 2005

Abstract

This paper proposes a fixed-effect panel methodology based on Islam (2000) to assess the existence of technology convergence across the Italian regions between 1963 and 1993. Our results find strong support to both the presence of TFP heterogeneity across Italian regions and to the hypothesis that TFP convergence has been a key factor in the process of aggregate regional convergence observed in Italy up to the midseventies. However, this period of TFP convergence has not generated a significant, persistent decrease in the degree of cross-region inequality in per capita income. Finally, our human capital measures has been found to be highly positively correlated with TFP levels. This evidence confirms one of the hypothesis 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 procedure such as simple LSDV, Kiviet-corrected LSDV, and GMM a la Arellano and Bond (1991).

Keywords: Economic growth, convergence, TFP, panel data

JEL Classification: C23, O47

Suggested Citation

Di Liberto, Adriana and Mura, Roberto and Pigliaru, Francesco, How to Measure the Unobservable: A Panel Technique for the Analysis of TFP Convergence (January 2005). Available at SSRN: https://ssrn.com/abstract=544402 or http://dx.doi.org/10.2139/ssrn.544402

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

Roberto Mura

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, Lancashire M15 6PB
United Kingdom

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

Francesco Pigliaru (Contact Author)

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

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