World Productivity Distribution: Convergence and Divergence Patterns in the Postwar Era

Abstract

The post-World War II period has seen substantial changes in labor productivity around the world. Motivated by these changes, this article documents four stylized facts about the world productivity distribution. First, there is a large and increasing disparity between its tails. Second, this disparity rapidly increased in the 1980s, slowed down in the next decade, and stabilized in the mid-2000s. Third, overtime, there has been substantial forward and backward mobility of countries and regions. Forth, the upper tail the distribution is more sensitive to improvements in human capital, while the lower tail is more sensitive to improvements in technology. The article concludes pointing out that, at least in the near future, the world productivity distribution may still be characterized by divergence at the bottom, and convergence and overtaking at the top.