Discovering the Sources of TFP Growth: Occupation Choice, Capital Heterogeneity, and Financial Deepening
Robert Townsend and
Hyeok Jeong ()
No 405, Econometric Society 2004 North American Summer Meetings from Econometric Society
The sources of "total factor productivity (TFP) growth" or the "Solow residual" typically remain unknown as a residual. This paper aims to identify the underlying sources of this residual growth, being explicit about micro underpinnings and transitional growth from occupation choices of heterogeneous agents and financial deepening in use of both macro and micro data. We develop a method of growth accounting that decomposes not only the overall growth but also the residual TFP growth into four components: occupational shifts, financial deepening, capital heterogeneity, and sectoral Solow residuals. Applying this method to Thailand, which experienced rapid growth with enormous structural changes for the two decades between 1976 and 1996, we find that 55 percent of TFP growth can be explained on average by occupational shifts and financial deepening, without presuming exogenous technical progress. Expansion of credit is a major part of this explained TFP growth. Decomposition of the simulation helps us to infer that for the remainder TFP growth, capital-heterogeneity effect is behind during the initial period (1976-1980) while sectoral Solow residuals, due to the surge of wage after 1986, is behind during the latter decade (1986-1996)
Keywords: TFP; Capital Heterogeneity; Occupation Choice; Financial Deepening (search for similar items in EconPapers)
JEL-codes: O47 O16 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:405
Access Statistics for this paper
More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().