Measurement of Productivity Change Revisited: Technical Change vs. Productivity Growth

Jong-Kun Lee
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Jong-Kun Lee: The Bank of Korea

Korean Economic Review, 1994, vol. 10, 55-81

Abstract: Recent developments in the methodological measurement of productivity change have contributed much to measuring the real productivity change. Productivity change is generally measured by either the rate of change an index of outputs divided by an index of inputs or the rate of shift in a production function. As Solow(1957) argued, total factor productivity(TFP) growth and technical change(TC) are the two sides of a same can One puzzing question is that two empirical measures, diverging from the theoretical identity between TC and TFP growth, show very different estimates, depending upon maintained assumptions and model specifications. The main purpose of the paper was to provide a systematic overview of tecknical change and productivity growth by reinterpreting the theoretical identity between TC and TFP growth and to investigate a theoretical background for adjusting the traditional mesures. We showed how traditional productivity mesures at a static equilibrium should be changed as the concepts of duality and dynamics are introduced into the underlying ftuiction, upon which parametric measurement of productivity is based.

Date: 1994
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