Another Look at Technical Efficiency in American States, 1979-2000

Document Type

Article

Publication Date

9-2014

Publication Title

The Annals of Regional Science

DOI

10.1007/s00168-014-0633-1

ISSN

1432-0592

Abstract

A recently developed stochastic frontier production function methodology is used to estimate econometrically how technical efficiency, technological progress, and returns to scale contributed to US states’ economic growth in 1979–2000. Improved regional human capital data that are superior to the traditional “years of school” data are included. In support of the prior literature, overall technical inefficiency is found to be low but unlike earlier studies diverging over time with almost no shifting of the aggregate frontier. Efficiency is positively associated with relative historical wealth, human capital, relatively worse recession experience, greater market concentration, and a smaller informal economy.

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