Labor productivity and comparative advantage in mining:: the copper industry in Chile

Abstract

Over the past two decades, the copper industry has enjoyed dramatic increases in labor productivity in both Chile and the United States. Recent research attributes most of the increase in the United States to innovation and technological change, rather than the exploitation of higher quality copper deposits due to the development of new mines and a shift in output from low to high productivity mines. This article assesses the sources of productivity growth in Chile, where well over half of the copper now produced comes from new mines. While better copper deposits are more important in Chile than the United States, innovation and technological change have contributed substantially to the growth in labor productivity in Chile as well. These findings are important for companies and countries striving to maintain a comparative advantage in mining.