State productivity and economic growth

Abstract

This study uses Bureau of Economic Analysis data on state-level productivity levels and growth rates over the period 1977–2019. We find that states with relatively high productivity tend to experience somewhat lower productivity growth over time, whereas states with relatively lower productivity experience somewhat higher productivity growth over time. We find compelling evidence for significant contributions from education (in the form of a college degree) as well as the role played by higher growth rates in the state-level Hispanic population as factors contributing to increased productivity. Worker/labour productivity constitutes a good indicator of changes to wages and living standards. Empirically examining interstate differences in state-level worker productivity growth across different time intervals helps to identify factors that influence geographical differentials in productivity as well as aids in the identification of the specific factors that determine rates of productivity growth and decline.