Using the manufacturing productivity distribution to evaluate growth theories

Some multi-sector endogenous growth models contain strong predictions about productivity differences across sectors in the form of a distribution or density function. In this paper it is demonstrated that this distribution is left-skewed for a wide range of plausible parameter values. This stands in contrast to the right-skewed shape of the respective empirical distribution estimated by kernel methods for a measure of relative productivity with data for more than 450 four-digit US manufacturing industries during 1958–1996. This difference can be traced back to the assumption of strong intertemporal technological spillover effects that are at work in these models.