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Measuring productivity increase by long-run prices: The early analyses of G.R. Porter and R. Giffen

By Arrigo Opocher

Abstract

The 19th century economic commentators did not possess a formal measure of the rate at which productivity was increasing during the industrial take-off. Yet they did develop an intuitive method based on the comparative change in prices and wages. This paper reviews the contributions of G.R. Porter and R. Giffen and, in the light of some modern contributions, presents an assessment of their rationality and improvability under current standards. It is argued, in particular, that a proper measure of industrial productivity increase based on the change in real earnings rates is the mathematical dual of a Solovian measure of the industrial Total Factor Productivity growth.

Topics: D33 - Factor Income Distribution, B16 - Quantitative and Mathematical, D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Year: 2009
DOI identifier: 10.1080/09672567.2010.522243
OAI identifier: oai:mpra.ub.uni-muenchen.de:18272

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