Productivity Accounting in Vertically (Hyper-)integrated Terms: Bridging the Gap between Theory and Empirics

The present paper is a methodological contribution introducing a disaggregated physical productivity accounting framework in vertically (hyper-)integrated terms, establishing a direct correspondence between Supply-Use Tables and Pasinetti’s (1973, 1988) theoretical magnitudes. As an empirical application, we computed productivity indicators and indexes of direction of technical change at the subsystem level for the case of Italy during 1999-2007. Our findings suggest that: (a) only 60 per cent of productivity growth accrued to real wages, (b) the degree of mechanization increased, (c) the most dynamic subsystems correspond to consolidated sectors, and (d) technical change has almost always been capital intensity increasing.