Lecture 22-2005 - MeasuringChangesin Productivity...

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Measuring Changes in  Productivity  Lecture XIII
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    Defining Changes in  Productivity  ( 29 Y x 1 y 2 y ( 29 Y x 1 y 2 y 1 y 2 y 2 1 p p -
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    In this figure, we assume that the inputs  are constant at  x , but the total level of  outputs has increased from ( y 1 , y 2 ) to  ( y ' 1 ,  y ' 2 ). 
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    1 x 2 x 2 x 1 x 1 x 2 x Technology Change in Input  Space
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    In both cases, most would agree that a  technical change has taken place.   Further, most would agree that the  technical change has increased the  economic well being of society.  We  now have more stuff for the same level  of inputs. 
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    However, there are some issues that  need to be raised:  First, one could raise the question about  embodied versus disembodied technical  change.  This debate regards whether there has been an  increase in knowledge, or whether there has  been an increase in the quality of inputs. 
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    If the increase in output has been associated  with an increase in quality of an input, is it  technical change?  For example, a large portion of the gains to  research literature can be traced to Griliches  discussion of hybrid corn.  In this case, the  increase in technology was associated with the  improvement in an input–seed. 
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    More recently, some of the most recently  observed increases in productivity may be  traced to genetically modified organisms  (GMOs).  Under most concepts of productivity, these  increases do not represent changes in  productivity in agriculture, but can be traced to  changes in the input bundle. 
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    A second area of concern is whether the 
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Lecture 22-2005 - MeasuringChangesin Productivity...

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