Changes in Productivity: The One-Third Rule

According to the One Third Rule, the changes in productivity in the US economy can be estimated as follows:

%Δ Productivity = 1/3(%Δ Physical Capital/labor hour) + %Δ Technology

For example, if productivity increased by a total of 3% and the stock of physical capital increased by 3%, then one could infer that 2% of the productivity was caused by advances in technology: 3% = 1/3(3%) + 2%

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