Working Paper: CEPR ID: DP18065
Authors: Alexander Klein; Nicholas Crafts
Abstract: This paper examines long-run unconditional convergence of labour productivity in manufacturing across 48 contiguous U.S. states. For that purpose, we construct a detailed panel data set of state-industry pairs with over 120 industries covering the period 1880-2007. We find that unconditional β-convergence in manufacturing productivity was pervasive and rapid – 7.6% per year in 1880-2007 – and that manufacturing accounts for most of the unconditional convergence contribution to overall productivity growth over the long run: 61% in 1880-1940 and 91% in 1958-2007. We also examined broad U.S. regions and found that in the South the contribution of unconditional β-convergence in manufacturing to aggregate productivity growth before World War II was weak not because of a slower convergence rate but a much smaller manufacturing sector.
Keywords: convergence; economic growth; US economic history; manufacturing
JEL Codes: O47; N11; N12; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| size of South's manufacturing sector (L69) | overall economic catch-up (O57) |
| initial productivity levels (O49) | growth rates (O40) |
| manufacturing productivity convergence (O47) | overall economic convergence (F62) |
| manufacturing sector performance (L60) | aggregate GDP growth (O40) |
| ICT industries convergence rate (L96) | overall convergence rate (F62) |
| first industrial revolution industries convergence rate (O14) | overall convergence rate (F62) |