Abstract

This study provides some empirical evidence and quantification of differences in labor productivity among industries and countries. Using a recently available data base of value added per worker, country and time fixed effects are estimated first for various industries. Results are subsequently elaborated, to identify some time trends and sectoral profiles by country, which are in turn employed in a cluster analysis, summarizing some salient characteristics of industrial labor productivity in different economies. The empirical exercise is motivated by the possible employment of its findings in the construction of long-run economic growth scenarios, by means of Computable General Equilibrium (CGE) models. It is found that: (a) Manufacturing is normally the fastest growing sector and its performance is strongly correlated with the aggregate productivity growth; (b) differences in the rates of agricultural productivity gains are relatively minor; (c) slow-growing countries are characterized by slow-growing Services.

Highlights

  • Labor productivity and productivity in general, does not vary uniformly, neither across sectors, nor across countries (Duarte & Restuccia, 2010)

  • This study provides some empirical evidence and quantification of differences in labor productivity among industries and countries

  • It is found that: (a) Manufacturing is normally the fastest growing sector and its performance is strongly correlated with the aggregate productivity growth; (b) differences in the rates of agricultural productivity gains are relatively minor; (c) slow-growing countries are characterized by slow-growing Services

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Summary

Introduction

Labor productivity and productivity in general, does not vary uniformly, neither across sectors, nor across countries (Duarte & Restuccia, 2010). Empirical works aimed at measuring how much (labor) productivity varies by industry and region are quite limited, primarily because of the lack of a consistent data base with sufficient coverage, including developing countries and possibly informal markets Such a high quality information source is available (de Vries et al, 2015), and this paper exploits that data source (like in Üngör (2013)) to highlight some key characteristics of differential labor productivity growth among sectors and countries. This source is the Groeningen Growth and Development Centre GGDC 10-Sector Database, providing a long-run internationally comparable dataset on sectoral productivity performance. From the series of real value added and employment, an unbalanced panel of labor productivity annual variations, covering 10 industries, 42 countries, and ranging from 1949 to 2013, can be readily obtained

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