Input Measurement and Productivity Growth in Japanese and U.S. Manufacturing

Abstract

This paper analyzes multifactor productivity growth (based on capital, labor, energy, and materials) and labor productivity growth in the Japanese and U.S. manufacturing sectors. We find that the tests of separability required for a value-added approach fail for both the U.S. and Japan, making gross output the correct approach.Additionally, confirming Jorgenson and Nishimizu, we find that the remarkable differences in productive efficiency between Japan and the U.S. — at the two-digit industry level — are largely due to differences in the levels of capital investment and not to differences in multifactor productivity.