In this paper I estimate the impact of unproductive activities on economic growth, labour productivity and income inequality in the United States from 1947 to 2011. Productive activities directly create value, while unproductive activities do not. I develop a new methodology to compute the growth of productive and unproductive activities in terms of flows of income and stocks of fixed assets using input-output matrices and national income accounts. A core feature of my methodology is the notion that the commodification of knowledge and information gives rise to ‘information rents’. Information rents are, as I demonstrate, a determinant factor of growth and distribution. I find that unproductive activities have a net positive effect on economic growth and labour productivity, but at the price of increasing income inequality. Unproductive activities that rely on information rents, in particular, have increased income inequality and slowed down value-added growth despite their positive contribution to labour productivity. Information rents have drawn too much value from productive activities and benefitted the top income earners.

Rotta, T. (2022) Information Rents, Economic Growth, and Inequality: An Empirical Study of the United States. Cambridge Journal of Economics (forthcoming)

…….Free-access link to the paper (no subscription or login required)

…….Link to the full appendix of the paper

…….Link to the slides of the paper

.

.