Structural Transformation, the Mismeasurement of Productivity Growth, and the Cost Disease of Services

Alwyn Young

American Economic Review, 2014, vol. 104, issue 11, 3635-67

Abstract: If workers self-select into industries based upon their relative productivity in different tasks, and comparative advantage is aligned with absolute advantage, then the average efficacy of a sector's workforce will be negatively correlated with its employment share. This might explain the difference in the reported productivity growth of contracting goods and expanding services. Instrumenting with defense expenditures, I find the elasticity of worker efficacy with respect to employment shares is substantially negative, albeit imprecisely estimated. The estimates suggest that the view that goods and services have similar productivity growth rates is a plausible alternative characterization of growth in developed economies.

JEL-codes: E23 E24 H56 J24 O41 O47 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.11.3635
References: Add references at CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.11.3635 (application/pdf)
http://www.aeaweb.org/aer/data/10411/20121621_data.zip (application/zip)
http://www.aeaweb.org/aer/app/10411/20121621_app.pdf (application/pdf)
http://www.aeaweb.org/aer/ds/10411/20121621_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:104:y:2014:i:11:p:3635-67

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().