Productivity and the Welfare of Nations

Luigi Pascali, Susanto Basu, Fabio Schiantarelli and Servén, Luis
Authors registered in the RePEc Author Service: Luis Servén

No 15600, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that the welfare of a countryiÌ s infinitely-lived representative consumer is summarized, to a first order, by total factor productivity (TFP), appropriately defined, and by the capital stock per capita. The result holds for both closed and open economies, regardless of the type of production technology and the degree of product market competition. Welfare-relevant TFP needs to be constructed with prices and quantities as perceived by consumers, not firms. Thus, factor shares need to be calculated using after-tax wages and rental rates. We use these results to calculate welfare gaps and growth rates in a sample of advanced countries with high-quality data on output, hours worked, and capital. We also present evidence for a broader sample that includes both advanced and developing countries.

Keywords: Productivity; Welfare; TFP; Solow residual (search for similar items in EconPapers)
JEL-codes: D24 D90 E20 O47 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cwa, nep-eff, nep-gro and nep-mac
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Related works:
Journal Article: Productivity and the Welfare of Nations (2022)
Working Paper: Productivity and the Welfare of Nations (2020)
Working Paper: Productivity and the Welfare of Nations (2016)
Working Paper: Productivity and the Welfare of Nations (2015)
Working Paper: Productivity and the Welfare of Nations (2013)
Working Paper: Productivity and the Welfare of Nations (2012)
Working Paper: Productivity and the Welfare of Nations (2012)
Working Paper: Productivity and the welfare of nations (2012)
Working Paper: Productivity and the welfare of nations (2012)
Working Paper: Productivity and the Welfare of Nations
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