We believe that the simplifying assumption of a

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Unformatted text preview: orker of Contribution from both capital and their own labor, which makes it difficult to obtain meaningful Output per Physical Total factor measures of income shares. We believe that the simplifying assumption of a Period/country Output Employment worker capital Education productivity constant share for capital and labor has minimal effects on the overall conclusions. With this framework, along with data on output and inputs of capital and labor, we 1978–2004 China 9.3 2.0 7.3 3.2 0.3 3.6 India 5.4 2.0 3.3 1.3 0.4 1.6 can then estimate total factor productivity as a residual term. 1978–1993 China 8.9 2.5 2.4 0.4 3.5 We report our results by dividing through both 6.4 sides of the production India 4.5 2.1 2.4 0.9 0.3 1.1 function by 1993–2004 China by taking logarithms of both sides. 4.2 a result, we labor input L and 9.7 As 1.2 8.5 0.3 3.9 India 6.5 East Asia excluding China 1960–1980 7.0 1980–2003 6.1 1980–1993 7.3 1993–2003 4.5 1.9 4.6 1.8 0.4 2.3 3.0 2.4 2.7 2.0 4.0 3.7 4.6 2.5 2.2 2.2 2.6 1.8 0.5 0.5 0.6 0.5 1.2 0.9 1.4 0.3 Source: Authors’ estimates as described in text; Bosworth and Collins (2003). Notes: The employment series is a census-comparable concept for both China and India. The East Asia comparison includes Indonesia, South Korea, Malaysia, Phillipines, Singapore, Taiwan, and Thailand. Growth rates may not sum due to rounding. Summary Production (I)  Production function delivers physical feasible levels of output given inputs  Marginal product of L, K  Average product of L, K  Law of diminishing marginal returns  Technological change countries are also notable for the extent to which their growth appears to have been the result of extremely rapid gains in both physical capital and educational attainment. Output, Employment, and Output per Worker The first column of Table 1 shows each country’s output growth. China’s annual output growth averaged a whopping 9.3 percent during the entire period. India’s annual growth rate is substantially lower, at 5.4 percen...
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