Capital Intensity and TFP Convergence by Industry in Manufacturing, 1963–1985

Abstract

Abstract Recent work has demonstrated that the OECD countries have become more similar in terms of aggregate characteristics. This growing similarity is evident in the marked convergence of overall labor productivity among industrialized countries in the postwar period, as well as in the convergence of aggregate total factor productivity (TFP) and capital–labor ratios.1 A recent study of ours (Dollar and Wolff 1988) began the investigation of how this productivity convergence has been manifested in particular industries. We addressed two issues in particular: the extent to which shifts in employment from low value–added to high value–added activities in manufacturing have contributed to aggregate labor productivity convergence, and the extent to which there has been labor productivity convergence in individual industries.