Generalized Solow-Neutral Technical Progress and Postwar Economic Growth

Michael J. Boskin and Lawrence J. Lau

No 8023, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using revised, updated, and consistent annual post-World War II data from the G-7 countries developed by us, we econometrically estimate and test alternative explanations of the structure of economic growth in a model with three inputs tangible capital, labor, and human capital which permits the identification of the magnitudes of and biases in both returns to scale and technical progress. We find: 1. Technical progress is simultaneously purely tangible capital and human capital augmenting, that is, generalized Solow-neutral.' This finding provides an alternative explanation of the slow pace of convergence in real GDP per capita: the benefits from technical progress depend directly on the levels of tangible and human capital; countries with higher levels of capital realize higher rates of technical progress.2. Technical progress has been capital, not labor, saving and thus is not a cause of systemic structural unemployment. 3. Technical progress accounts for more than 50 percent of the economic growth of the G-7 countries except Canada. Tangible capital input is next most important; together with technical progress, they account for three quarters or more of the growth of real output in the G-7 countries, except Canada. 4. The most important source of the growth slowdown since the mid-1970's decline in the rate of capital (both tangible and human)-augmenting technical progress.

JEL-codes: O3 O4 (search for similar items in EconPapers)
Date: 2000-12
Note: EFG
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Citations: View citations in EconPapers (28)

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