Alternate Table 16.2 Productivity in the Railroad Sector, 1870-1910 (1910 100) T

Question

Alternate Table 16.2 Productivity in the Railroad Sector, 1870-1910 (1910 100) TABLE 16.4 Total Factor Productivity Growth in American Railroads 1839-1910 Total Factor Year Output 0.08 0.46 2.21 6.57 13.87 32.82 54.84 Capital 0.8 2.2 10.1 16.6 1.5 61.9 72.3 Labor 0.3 Productivi LAC 0.07 0.20 1839 1849 1859 1870 5.0 13.5 24.5 11.1 59.9 16.0 32.8 33.5 47.3 53.6 66.6 86.7 5.4 11.7 1880 1890 1900 1910 28.7 45.9 100 100 100 100 100 Source: Albert Fishlow, "Productivity and Technological Change i te Railroad Sector 1840-1910,"in National Bureau ol Economic Research, Output, Emyployment and Productivity in the United States after 1800, Studies Income and Wealth, vol. 30 (New York: Columhia University Press, 1966): 626

Explanation / Answer

(a) Average annual growth rate of TFP:

1839-1849: (32.8 / 16)1/10 - 1 = (2.05)1/10 - 1 = 1.0744 - 1 = 0.0744 = 7.44%

1849-1859: (33.5 / 32.8)1/10 - 1 = (1.0213)1/10 - 1 = 1.0021 - 1 = 0.0021 = 0.21%

1870-1880: (53.6 / 47.3)1/10 - 1 = (1.1332)1/10 - 1 = 1.0126 - 1 = 0.0126 = 1.26%

1880-1890: (66.6 / 53.6)1/10 - 1 = (1.2425)1/10 - 1 = 1.022 - 1 = 0.022 = 2.2%

1890-1900: (86.7 / 66.6)1/10 - 1 = (1.3018)1/10 - 1 = 1.0267 - 1 = 0.0267 = 2.67%

1900-1910: (100 / 86.7)1/10 - 1 = (1.1534)1/10 - 1 = 1.0144 - 1 = 0.0144 = 1.44%

(b) Growth rate was highest in 1839-1849 and lowest in 1849-1859.

Please state the period/duration of Civil war.

(c)

1987-1997: (100 / 69.4)1/10 - 1 = (1.4409)1/10 - 1 = 1.0372 - 1 = 0.0372 = 3.72%

2007-1997: (110.3 / 100)1/10 - 1 = (1.103)1/10 - 1 = 1.0099 - 1 = 0.0099 = 0.99%

The first rate is mostly higher than, and the second rate is mostly lower than, the rates found in part (a).

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