Energy, capital and technological change in the United States

During the years 1950–1973, energy and capital were jointly substituted for labor, and real GNP per hour increased at 2.5% annually. Following the energy price shocks of 1973–1974 and 1979–1981, both capital utilization and energy per worker hour fell abruptly. Likewise, the growth in real GNP per hour declined to 1.2%. This paper specifies and estimates aggregate production functions designed to identify the roles of capital-labor substitution, energy-labor substitution, and technological change as sources of labor productivity growth. Declining energy intensity was an important partial cause of the slowdown in productivity growth.