The project aims at interpreting long- and medium-run productivity dynamics in light of various realistic factor market imperfections. In endogenous growth models, productivity dynamics are driven by private optimal decisions to invest in physical capital or knowledge. A lower income share for accumulated factors such as physical capital and new knowledge implies lesser incentives to save rather than consume, and slower productivity growth if private optimal investment decisions are the engine of growth. Income shares may in turn be explained in light of imperfectly competitive factor market interactions. This research will seek interpretations for the post-1973 worldwide productivity slowdown. Non-accumulated production factors such as natural resources and labor enjoyed higher shares of worldwide production in the 1970s. This may be explained in terms of changes in factor market structure, with a prominent role for insider power in unionized labor markets and cartelization of natural resource markets.
