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Unconditional Convergence in Manufacturing Productivity across U.S. States: What the Long-Run Data Show

Unconditional Convergence in Manufacturing Productivity across U.S. States: What the Long-Run Data Show

660/2023 Alexander Klein, Nicholas Crafts
economic history, working papers

660/2023 Alexander Klein, Nicholas Crafts

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 -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 -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. 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.