Human Capital and Macroeconomic Convergence: A Production-Frontier Approach

Daniel Henderson () and Robert Russell

No 2001/07, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), (3) human capital accumulation (changes in the efficiency of labor), and (4) capital accumulation (movement along the frontier). The world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections. We find that technological change is decidedly non-neutral. We also analyze the evolution of the cross-country distribution of labor productivity in terms of the quadripartite decomposition, finding that (1) productivity growth and the increased dispersion of the distribution is driven primarily, and roughly equally, by physical and human capital accumulation and (2) international bipolarization (the shift from a unimodal to a bimodal distribution) is brought about primarily by efficiency changes.

Keywords: international convergence; productivity; human capital; production frontiers; DEA (search for similar items in EconPapers)
Pages: 30
Date: 2001
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Citations: View citations in EconPapers (9)

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