Barbara M. Fraumeni

Productivity and U.S. Economic Growth

Overview. Methodology. Sectoral Labor Input. Sectoral Capital Input. Sectoral Output and Intermediate Output. Growth in Sectoral Output. Sectoral Substitution and Technical Change. Aggregate Labor and Capital Inputs. Growth in Aggregate Output. Appendices.

Relative Prices and Technical Change

In this paper our objective is to analyze technical change and the distribution of the value of output for thirty-six industrial sectors of the U.S. economy. Our most important conceptual innovation is to determine the rate of technical change and the distributive shares of productive inputs simultaneously as functions of relative prices. We show that the effects of technical change on the distributive shares is precisely the same as the effects of relative prices on the rate of technical change.

Investment in Education and U.S. Economic Growth

The purpose of this paper is to measure the impact of investment in education on U.S. economic growth. Education is treated as an investment in human capital, since benefits accrue to an educated individual over a lifetime of activities. One of the most important benefits is higher income from labor market participation. This is the key to understanding the link between investment in education and economic growth. The authors most important finding is that investment in human and nonhuman capital accounts for an overwhelming proportion of the growth of the U.S. economy during the postwar period. Educational investment will continue to predominate in the investment requirements for the more rapid growth. Copyright 1992 by The editors of the Scandinavian Journal of Economics.

Investment in Education

The purpose of this paper is to present new measures of the benefits from education. These measures are based on the incremental effect on human wealth of participation in formal schooling. We define human wealth as the sum of lifetime labor incomes for all individuals in the U.S. population. These incomes include the value of time spent working and the value of nonmarket labor activities, which are defined to include parenting and the enjoyment of leisure. Our estimates of lifetime labor incomes are drawn from an extensive data base on income from work. We have enlarged this data base to incorporate the value of nonmarket activities. We compare our estimates of investment in education and human wealth with estimates based on the expenditures of educational institutions. We find that these expenditures are very much smaller than the benefits of education.

HUMAN CAPITAL IN CHINA, 1985–2008

We estimated Chinas human capital stock from 1985 to 2008 based on the Jorgenson–Fraumeni (J–F) lifetime income framework. In order to accommodate the Chinese data and to capture human capital accumulation through both formal education and informal training, we modified the original J–F method by incorporating the Mincer model. We calculated total and per capita human capital stock for different population groups, and studied their trends and dynamics during the course of economic transition. We also constructed Divisia indexes of various orders to evaluate the contribution of different factors to the growth of human capital in China.

Capital Formation and U.S. Productivity Growth, 1948–1976

Rapid growth of the U.S. economy during the postwar period has been sustained by the highest rate of capital formation in U.S. economic history. The postwar performance of the U.S. economy is all the more remarkable in view of the experience of the 1930s, when growth was negligible and the rate of capital formation was severely depressed. Capital formation in the form of tangible assets dropped precipitously after the cyclical peak in economic activity in 1973, and economic growth has slowed measurably. The revival of capital formation is clearly the key to reestablishment of postwar trends in economic growth in the United States.

The Accumulation of Human and Nonhuman Capital, Revisited

In the 25 years since Jorgenson and Fraumeni (1989) published their first article on human capital, the U.S. National Income and Product Accounts (NIPA) and the SNA have changed significantly. The contribution of this paper is two-fold: Creation of a contemporary set of accounts which integrate human capital measures into the latest comprehensive revision of the U.S. national income accounts and an analysis of trends in human capital and national income account aggregates over the post-war period.The paper is a national income accounting paper with production and factor outlay, income, receipt and expenditure, capital accumulation , and wealth accounts. All of these accounts are tied to the NIPA accounts, and supplemented with human capital estimates. A key feature of the human capital accounts is presentation of human capital estimates in current and constant prices. The time period covered is 1949-84 and 1998-2009.We update the human capital national income accounts and examine trends in the aggregate time series. The results in the original Jorgenson and Fraumeni paper are for 1982 and the aggregate time series are from 1949-1984. Subsequent research by Christian (2012) developed modified Jorgenson-Fraumeni (J-F) human capital estimates from 1998 through 2009. Unfortunately there is a gap in coverage. Nonetheless, a comparison of the aggregates and their trends between the earlier and later period will be informative. The accounting tables in this new paper are for 2009, the latest base year for the NIPA accounts.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Improving the Treatment of Holding Gains and Default Losses in National Accounts

Holding gains and losses and default losses play key roles in the operations and reported income of financial intermediaries and other businesses, but are excluded from the national accounts definition of income. Measures that combine income and holding gains/losses and that adjust the income of lenders for predictable default losses are needed to understand the operating results of businesses and the resources available to households, and should be presented in supplementary accounts. Changing the national accounts treatment of retained earnings of corporations to include retained earnings in the income of shareholders would provide improved insight into the roles of holding gains and saving in changes in the wealth of households and governments. To measure output properly in the core national accounts, apparent holding gains that are really payments for services must be distinguished from true holding gains, and expected default losses must be excluded from FISIM on loans.