Intra- and Inter-Sectoral Knowledge Spillovers and TFP Growth Rates

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I estimate unobserved labor-generated knowledge spillovers within and between six large macroeconomic sectors covering the US civilian economy from 1948 to 1991 and relate them to observed productivity changes. I construct a series of sectoral knowledge spillover matrices that show the changes in the magnitude and direction of intraand inter-sectoral spillovers for each sector. I show that the productivity slowdown in the US economy of the early seventies is associated with a decline of intra-sectoral spillovers and the emergence of inter-sectoral spillovers. This change coincides with trade taking over manufacturing as the main source and destination of new knowledge flows. The analysis of technology flows, measured as the production and use of patents, corroborates this finding. Furthermore, I also compute the gap between the market, which ignores knowledge spillovers, and the optimal allocation of labor across sectors, and the wedge between market and optimal wage rates by sector. I show that optimal employment in manufactures is 32% higher than the market allocation, and that optimal wages in the overall economy are 31% above market wages.

Keywords: Knowledge spillovers; technology; productivity slowdown (search for similar items in EconPapers)
JEL-codes: D24 J24 O30 O40 (search for similar items in EconPapers)
Date: 2007-04
New Economics Papers: this item is included in nep-eff, nep-ino and nep-knm
References: View references in EconPapers View complete reference list from CitEc
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Related works:
Working Paper: Intra- and Inter-sectoral Knowledge Spillovers and TFP Growth Rates (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2853

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