TY  - JOUR
AU  - Morrison,Catherine J.
AU  - Schwartz,Amy Ellen
TI  - State Infrastructure and Productive Performance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3981
PY  - 1992
Y2  - January 1992
UR  - http://www.nber.org/papers/w3981
L1  - http://www.nber.org/papers/w3981.pdf
N1  - Author contact info:
Catherine J. Morrison
Department of Agricultural Economics
UC, Davis
Davis, CA  95616
Tel: 617/381-3560
E-Mail: no email available

Amy Ellen Schwartz
Institute for Education & Social Policy, New York
665 Broadway, Suite 805
New York, NY 10012
E-Mail: amy.schwartz@nyu.edu
AB  - The impact of public infrastructure investment on the productive performance of firms has been an important focus of the recent literature on productivity growth. The size of this impact has important implications for policymakers' decisions to invest in public capital, and productivity analysts' evaluation of productivity growth fluctuations and declines. However, detailed evaluation of the infrastructure impact is difficult using existing studies which rely on restricted models of firms' technology and behavior. In this paper we construct a more complete production theory model of firms' production and input decisions. We then apply our framework to state-level data on the output production and input (capital, nonproduction and production labor and energy) use of manufacturing firms to evaluate the contribution of infrastructure to firms' costs and productivity growth. We find that infrastructure investment does provide a significant direct benefit to manufacturing firms and thus augments productivity growth. We also show, however, that this evidence should be interpreted taking into account the social cost of such capital (which is not reflected in firms' costs), and the indirect impact resulting from scale effects.
ER  -