Working Paper: NBER ID: w11948
Authors: Carol A. Corrado; Charles R. Hulten; Daniel E. Sichel
Abstract: Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.
Keywords: intangible capital; economic growth; productivity
JEL Codes: O47; E22; E01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exclusion of intangible capital (E22) | underestimation of economic growth (O49) |
| inclusion of intangible assets (O34) | increase in output per worker (O49) |
| inclusion of intangibles (O34) | capital deepening becomes dominant source of productivity growth (O49) |
| rise of intangible capital (E22) | decrease in labor's income share (E25) |
| rise of intangible capital (E22) | shift in income distribution favorably towards capital (D33) |