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Pablo Fajgelbaum
UCLA
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The world looks more like the 3rd panel, so we must use a production
function to infer dierences in A
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Development Accounting
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= yi /yUS
= Ai /AUS
1
= ki hi1 /kUS
hUS
Then
ry ,i = rA,i rf ,i
in logs
ln ry ,i = ln rA,i + ln rf ,i
Implies
var [ln ry ,i ] = var [ln rA,i ] + var [ln rf ,i ] + 2cov [ln rf ,i , ln rA,i ]
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0.49
0.38
0.39
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Growth Accounting
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Growth Accounting
Can we obtain a concrete measure of how important is factor
accumulation for growth dierences?
Start in general from
y = AF (k, h )
Take total derivative with respect to all factors of production and
productivity
dy = F (k, h ) dA + AFk (k, h ) dk + AFh (k, h ) dh
Divide both sides by Y
dy
F (k, h )
AFk (k, h )
AFh (k, h )
dA +
dk +
dh
=
y
AF (k, h )
AF (k, h )
AF (k, h )
to reach
gy = gA +
Fajgelbaum (UCLA)
AFk (k, h ) k
AF (k, h )
dk
+
k
AFh (k, h ) h
AF (k, h )
dh
h
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) gh
2005
2005
= 42%
Fajgelbaum (UCLA)
) gh (i )]
= 68%
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Measurement Issues
Measurement of human capital
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
Fajgelbaum (UCLA)
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Measurement Issues
Measurement of human capital
Not only years of education but also quality (much harder to measure)
matters
Human capital is accumulated in forms other than schooling
What do these issues imply for the gaps in our measured productivity
and income across poor and rich countries?
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Where next?
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