Intangible Capital and Economic Growth

52 Pages Posted: 10 Nov 2006  

Carol A. Corrado

The Conference Board; Georgetown University - Center for Business and Public Policy

Daniel E. Sichel

Wellesley College; NBER

Charles R. Hulten

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2006

Abstract

Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.

Keywords: Economic growth, investment, intangibles, capital, productivity, economic measurement

JEL Classification: O47, E22, E01

Suggested Citation

Corrado, Carol A. and Sichel, Daniel E. and Hulten, Charles R., Intangible Capital and Economic Growth (June 2006). FEDS Working Paper No. 2006-24. Available at SSRN: https://ssrn.com/abstract=943769 or http://dx.doi.org/10.2139/ssrn.943769

Carol A. Corrado (Contact Author)

The Conference Board ( email )

845 Third Avenue
New York, NY 10022
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202-340-0252 (Phone)

Georgetown University - Center for Business and Public Policy ( email )

Washington, DC 20057
United States

HOME PAGE: http://cbpp.georgetown.edu

Daniel E. Sichel

Wellesley College ( email )

106 Central St.
Wellesley, MA 02181
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles R. Hulten

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

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