The aggregate productivity slowdown: A system approach

Abstract

I revisit the productivity slowdown debate by estimating the capital-labor elasticity and the bias of technical change for the U.S. economy under four different models of technical change. One with constant growth rates, one with a structural break in the constant growth rates, one in which growth is linear, and one with flexible time-varying growth rates. I find evidence in support of non-constant growth rates of factor-augmenting technical change. Labor-augmenting technical change growth rates are decelerating, while capital-augmenting technical change is non negligible but vanishes quickly.