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Nonlabor income measures of capital intensity versus capital stock measures in estimatingthe determinants of regional labor productivity differentials: The manufacturing sector

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Abstract

This study is concerned with the estimation and explanation of regional differentials in productivity and with nonlabor income per unit of labor is a usable capital intensity proxy in the estimation of Cobb-Douglas production functions. The approach is to estimate labor productivity as a function: first of regional dummy variables and urbanization; second, of these variables plus capital intensity and other production function variables; and third, of all these variables plus labor force characteristics. Large regional labor productivity differentials emerge. Adding capital intensity measured either as capital stock or nonlabor income per unit of labor substantially reduces these differentials. Adding labor force characteristics then completely eliminates the differentials in most instances. At this point, however, it becomes clear that the estimates based on nonlabor income per unit of labor are as good as, if not better than, those based on the capital stock measure. Finally, the productivity disadvantage of the South is related to its low levels of education and unionization.

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Authors and Affiliations

  1. Oklahoma State University, USA

    Ronald L. Moomaw

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  1. Ronald L. Moomaw
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Additional information

This study was initiated at the Urban Institute with funds from the Economic Development Administration, U.S. Department of Commerce. Support from the Office of Business and Economic Research and the College of Business Administration Dean's Excellence Fund facilitated substantial revisions. The views in this paper are those of the author and do not necessarily reflect those of the Oklahoma State University, the Urban Institute, or their sponsors.

I wish to thank Mike Applegate and Larry Ledebur, for their assistance.

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Moomaw, R.L. Nonlabor income measures of capital intensity versus capital stock measures in estimatingthe determinants of regional labor productivity differentials: The manufacturing sector. Ann Reg Sci 17, 79–93 (1983). https://doi.org/10.1007/BF01284236

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  • DOI: https://doi.org/10.1007/BF01284236

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