BIAS IN THE MEASUREMENT OF TECHNICAL CHANGE.

Professor Solow's article, "Technical Change and the Aggregate Production Function," now virtually classic, has made a great impact on economists generally and in the last few years the subject has received unprecedented attention in economic literature. The reason for this extraordinary emphasis on "Technical Change" has been the conclusion—in Solow's above-mentioned article—based on statistical evidence, that gross output per man-hour in the United States nonfarm economy doubled over the period 1909-1949, "with 87.5 percent of the increase attributable to technical change and the remaining 12.5 percent to increased use of capital." Technical change is defined as shifts in the production function as against the movements along an isoquant. Recent studies by Massel, Edward and Drane, and Dhar and Seth, using exactly the same methods have supported this conclusion. It is the contention of this note that the importance of technical change as a contributor to the growth of output per man-hour has been overestimated because of the upward bias involved in the implied assumptions used in the method of estimation. [ABSTRACT FROM AUTHOR]