We propose a transactions cost theory of total factor productivity (TFP). In a world with asymmetric information and transactions costs, productivity must be induced by incentive schemes. Labor contracts trade off marginal benefits and costs of effort. The latter include, in addition to the...

In this paper, sustained technological progress results from the feedback between technical change and the accumulation of wealth. The production technology is affected by a productivity factor which ensues from research and development. The research and development process is described as a...